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3 Great Growth ETFs for 2024

Highly rated strategies that tap into the market’s highflyers.

3 Great Growth ETFs

Ryan Jackson: Almost everyone knows the old investing refrain: buy low, sell high. But over the past few years, investors are adopting a new rallying cry: buy high, sell higher.

This adage describes growth-stock investing. Instead of hunting for companies at deep discounts, growth funds pursue pricey stocks whose rich valuations reflect their competitive advantages, sound balance sheets, rosy outlooks, or other attractive features.

Growth funds have thrived over the past decade thanks to firms like Netflix NFLX and Nvidia NVDA—companies that seemed pricey at the time but turned out to be real bargains. If growth’s tremendous run continues, these three ETFs should make out well.

3 Great Growth ETFs for 2024

  1. Schwab U.S. Large-Cap Growth ETF SCHG
  2. Vanguard International Dividend Appreciation ETF VIGI
  3. iShares MSCI USA Quality ETF QUAL

First up is Schwab U.S. Large-Cap Growth ETF, which trades under the ticker SCHG. This strategy’s straightforward, sensible approach and razor-thin fee earn it a Morningstar Medalist Rating of Silver.

SCHG is a great choice for investors who want broad exposure to US growth stocks. This index strategy sweeps in companies that represent the faster-growing half of the US large-cap market and weights them by market capitalization. This provides an accurate snapshot of the large-growth landscape, allowing the fund’s rock-bottom fee to work its magic. It charges just 4 basis points per year, making it one of the cheapest strategies available.

Its simplicity has bred success. The fund generated a 15.7% annual return over the past decade and beat more than 90% of its large-growth peers over the trailing three-, five-, and 10-year periods.

We’ll travel overseas for our second fund, Vanguard International Dividend Appreciation ETF, ticker VIGI. It’s one of the best foreign-stock ETFs available, earning it a Morningstar Medalist Rating of Gold.

This index strategy targets foreign large- and mid-cap stocks that have increased their dividend payments for at least seven consecutive years. It strips out companies with falling prices, which stabilizes the portfolio and strengthens its growth orientation. The fund weights its portfolio by market cap but limits holdings to 4% of the portfolio to improve diversification. All that comes at a paltry 0.15% expense ratio.

Requiring seven years of dividend growth yields a stable portfolio of high-quality stocks. VIGI has consistently hung tough during drawdowns yet performed well during rallies. That rare combination pushed its risk-adjusted returns to the top of the foreign large-growth category since its 2016 inception.

Today’s final ETF technically sits in the large-blend Morningstar Category, but its growthy orientation earns it a spot on my list. Say hello to iShares MSCI USA Quality ETF, QUAL, which sports a Silver Morningstar Medalist Rating.

This index fund features mid- and large-cap stocks with high profitability, low leverage, and stable earnings growth. It assigns each company a quality score, which determines whether they make the cut and decides their portfolio weight, along with market cap. This fund also ties its sector allocation to the broad US market. That helps it avoid large sector bets that can arise in growth funds like SCHG. Moreover, this fund offers solid exposure to the quality premium, a time-tested factor that has historically been tied to market-beating returns.

This recipe of quality and sector balance has powered stellar returns. The fund gained 12.6% per year over the past decade, leading more than 90% of its large-blend peers along the way.

Watch 3 Great ETFs for 2024 and Beyond for more from Ryan Jackson.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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