If you’re a growth investor looking for good returns, now may be the time to look away from just the “Magnificent 7” as many of them are at sky-high valuations. To gain more diversification and to minimize your overall risk, an exchange-traded fund (ETF) could make for a more attractive long-term investment.
One ETF that gives you exposure to more than 100 growth stocks is the iShares Russell Top 200 Growth ETF (NYSE Arca:IWY). The fund tracks the Russell Top 200 Growth Index, which includes large-cap U.S. equities expected to grow at an above-average rate relative to the market.
The ETF trades on the NYSE Arca and has about 110 holdings. Its expense ratio is 0.20%.
The fund's top holdings include the “Magnificent 7” but there are also many other big names, such as Eli Lilly (NYSE:LLY), Visa (NYSE:V), and Home Depot (NYSE:HD). Approximately 60% of its assets are invested in the top 10 holdings, indicating a high concentration in its largest investments. While this concentration can offer significant exposure to the fund’s best ideas, it also means that the ETF's performance is more closely tied to these top holdings.
The fund has proven to be a market-beating investment over the past decade with total returns (which include dividends) of 366%, which is far better than the S&P 500’s returns of 230%. And it has even outperformed the tech-heavy Nasdaq, which has risen by more than 315%.
If you want to invest in more than just the “Magnificent 7,” then the iShares Russell Top 200 Growth Index can be a great option to consider.
