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The Vanguard S&P 500 ETF (NYSEARCA:VOO) is one of the most standard ETFs for investors who want growth and stability. The fund was launched in 2010 and offers a low 0.03% expense ratio for exposure to the most popular benchmark in the stock market.
VOO hasn’t been a bad investment with its annualized 14.8% return over the past five years. However, you can multiply your money much faster with three growth ETFs that haven’t received as much attention.
iShares Semiconductor ETF (SOXX)
The iShares Semiconductor ETF (NASDAQ:SOXX) is one of the top ETFs for capitalizing on the AI boom. Advanced Micro Devices (NASDAQ:AMD), Broadcom (NASDAQ:AVGO), and Nvidia (NASDAQ:NVDA) are the top three positions that make up more than 20% of the fund’s total assets. Almost 60% of SOXX’s capital goes into its top 10 holdings, with a total of 34 stocks in the portfolio.
Its prime focus on AI has helped SOXX outperform VOO over many years. The iShares Semiconductor ETF has an annualized 20.6% return over the past five years and an annualized 27.1% return over the past decade. Few ETFs can match SOXX in bull markets, and even fewer funds are as consistent as SOXX at delivering compelling long-term returns.
The fund has even continued to heat up in recent years, with an annualized 36.2% return over the past three years. SOXX comes with a 0.34% expense ratio, which is higher than most Vanguard ETFs, but most investors won’t mind considering the returns the iShares Semiconductor ETF has produced.
State Street Technology Select Sector SPDR ETF (XLK)
The State Street Technology Select Sector SPDR ETF (NYSEARCA:XLK) is a more nuanced version of VOO. Instead of investing in every S&P 500 company, XLK only holds tech companies that are in the index. That results in only 70 stocks and a stronger focus on the Magnificent Seven.
It’s a very top-heavy fund, with 61% of its assets going into its top 10 positions. Nvidia, Apple (NASDAQ:AAPL), and Microsoft (NASDAQ:MSFT) combine to make up almost 40% of the State Street ETF’s total assets. Almost all of its holdings are in large-cap stocks, with an emphasis on growth.
That approach has worked well for XLK. It has an annualized 19.3% return over the past five years and has delivered an annualized 22.1% return over the past decade. Taking the best stocks in the S&P 500 and putting them in a custom portfolio may produce higher long-term returns. XLK seems to have taken that approach successfully by focusing on the S&P 500’s most valuable sector. XLK only has a 0.08% expense ratio.
Vanguard Growth Index Fund ETF (VUG)
If you’re looking for VOO alternatives that keep you in the Vanguard ecosystem, the Vanguard Growth Index Fund ETF (NYSEARCA:VUG) is a good choice to consider. The Vanguard ETF only has a 0.04% expense ratio and even comes with a 0.39% SEC yield, so the cash distributions are more than enough to cover fees.
VUG has an annualized 15.5% return over the past five years and an annualized 17.3% return over the past decade. Just like the other funds on this list, VUG has outperformed VOO, but this Vanguard ETF offers more diversification than SOXX and XLK.
The Vanguard Growth Index Fund ETF still places a strong focus on tech stocks, but almost half of its capital is in non-tech investments. It’s still top-heavy with a focus on the Magnificent Seven, but that seems to be a common pattern among many top-performing ETFs. VUG has almost 200 holdings in its portfolio, further solidifying its diversification. It’s better than VOO but not as good as the other two ETFs. However, VUG won’t fall as much as SOXX and XLK during market corrections.