Investing in a growth ETF can be a smart way to build your portfolio with minimal effort. A growth ETF is a collection of stocks that have the potential to earn higher-than-average returns, grouped together into a single investment.
Growth ETFs can be riskier than broad-market funds, like S&P 500 ETFs. However, they could also help you earn hundreds of thousands of dollars more over time. While all investments are different, there are three growth ETFs that could be smart choices in 2025 and beyond.
1. Vanguard S&P 500 Growth ETF
The Vanguard S&P 500 Growth ETF (VOOG 0.05%) is similar to an S&P 500 ETF in that all of the stocks are listed in the S&P 500 index (^GSPC -0.03%). However, this ETF contains only the 234 stocks with the most potential for growth.
The S&P 500 itself includes stocks from 500 of the largest U.S.-based companies. There are strict requirements for companies to be listed on this index, making these stocks among the strongest in the world.
For that reason, this ETF can be safer than many other growth funds. While high-growth stocks tend to be more volatile than stocks that are more established, those within the S&P 500 are more likely to survive any market downturns on the horizon.
Over the last 10 years, the Vanguard S&P 500 Growth ETF has earned an average rate of return of 15.14% per year -- slightly higher than the Vanguard S&P 500 ETF's average return of 13.06% per year in that time. If you were to invest $200 per month while earning 15% average annual returns, you could accumulate around $511,000 after 25 years.
2. Schwab U.S. Large-Cap Growth ETF
The Schwab U.S. Large-Cap Growth ETF (SCHG 0.10%) contains 229 large-cap stocks from a variety of industries, all with the potential to earn above-average returns.
Because all of the stocks within the fund are from large companies, this ETF is also slightly lower risk than some other growth funds. Large-cap stocks are from companies with a market cap of at least $10 billion, and these companies are often more stable than smaller corporations.
While even the biggest stocks can still face short-term volatility, large-cap stocks, in general, are more likely to recover from downturns and go on to see positive returns over several years. As long as you hold your investment for at least a decade or so, you're more likely to see consistent growth with large-cap stocks than you might with smaller stocks.
Despite its relative safety, this ETF also packs a punch. Over the past 10 years, it's earned an average rate of return of 16.55% per year. If you were to invest $200 per month at a 16% average annual return, that could add up to around $598,000 over 25 years.
3. Vanguard Information Technology ETF
The Vanguard Information Technology ETF (VGT -0.33%) is the riskiest fund in this list, but it's also the highest-earning of the three. It contains 316 stocks, all of which are from the technology industry.
Investing in an industry-specific fund like this one can be a smart way to gain exposure to a particular sector of the market without having to invest in individual stocks. That said, these types of ETFs offer less diversification, so you'll need to ensure the rest of your portfolio is filled with stocks or funds from other industries to protect your money as much as possible.
This ETF can be a good fit for those willing to take on more risk for the potential to earn higher-than-average returns. Its average return over the past 10 years is a staggering 20.75% per year, which could turn $200 per month into nearly $1.3 million after 25 years.
Keep in mind, though, that this ETF may or may not continue with those types of returns. The tech sector can be extremely volatile, so it's wise to keep your expectations in check if you choose to buy.
Growth ETFs can supercharge your savings, but beware of the extra risk they can carry. As part of a well-diversified portfolio, these three ETFs could help you earn more than you might think over time.
