3 Growth ETFs to Invest $1,000 in Right Now

Just because the market is sitting near all-time highs, it doesn’t mean you should stop investing in stocks. Getting into the mindset that you should wait for a pullback often traps people in a cycle of waiting for a better entry point and missing out as stocks keep grinding higher.

A J.P. Morgan study looked at every trading day going back to 1950 and found that the market hits a new high about 7% of the time. On nearly a third of those occasions, investors never saw a lower price.

A smarter strategy is to get started now and keep adding money on a regular basis, no matter where the market is trading. This is called dollar-cost averaging, and it is one of the simplest and most effective ways to build wealth over the long term. The key is consistency.

Growth stocks are leading the market right now, and there is a good chance that this will continue well into the future. The big reason for this is artificial intelligence (AI), which appears to be a game-changing technology that is still in its early innings. And unlike the past internet boom and bust, AI is being led by some of the largest, most profitable tech companies in the world that are generating huge free cash flow and have rock-solid balance sheets.

If you have $1,000 to put to work, these three exchange-traded funds (ETFs) give you great exposure to the biggest growth trends shaping the market. Remember, though: $1,000 is just a starting point, and you want to consistently invest into these funds each and every month.

Invesco QQQ Trust

If you follow the market, you have probably noticed that the Nasdaq Composite has been the best-performing broad-based index this year. This isn’t something unusual, though; the tech-heavy index has been outperforming the S&P 500 for years.

One of the best ways to play this phenomenon is by investing in the Invesco QQQ Trust (QQQ 0.68%), which tracks the Nasdaq 100 index, made up of the 100 largest nonfinancial companies on that exchange. Its portfolio is heavily weighted toward tech and growth stocks, with more than 60% of its assets in technology.

That weighting has paid off big for investors. Over the past decade, the Invesco ETF has delivered a total return of more than 490%, or 19.7% a year, crushing the S&P 500’s return over the same period. What’s even more impressive is that the Invesco QQQ Trust has outperformed the S&P 500 nearly 90% of the time on a rolling-12-month basis over this period.

Vanguard Growth ETF

Another great growth option is the Vanguard Growth ETF (VUG 0.98%), which tracks the CRSP US Large Cap Growth Index — essentially the growth half of the S&P 500. However, given that many growth stocks have risen to become the largest in the world, it only holds about 165 large-cap stocks.

The ETF’s top 10 holdings are very similar to those of the S&P 500, but you’re getting them in a much higher concentration. In fact, these holdings represent nearly 63% of its total portfolio. You’re also getting a very heavy dose of the top AI names.

The Vanguard ETF’s tech and growth focus has helped the fund nicely outperform over the years. It has delivered an average annual return of 17.1% over the past decade and 25% over the past three years, as of the end of August.

Vanguard Information Technology ETF

For investors looking for even more tech exposure, the Vanguard Information Technology ETF (VGT 0.99%) is a top option. It holds over 300 stocks, but about 44% of its portfolio is in only three stocks: Nvidia (17.2%), Microsoft (13.7%), and Apple (13.1%). That’s a lot of concentration at the top, but these companies got there through years of outperformance.

The ETF’s performance speaks for itself. Over the past 10 years, it has generated an average annual return of 22%, which is exceptional even by growth ETF standards. It’s been even better over the past three years, producing a 26.8% yearly return.

If you believe that AI will continue to reshape the economy, the Vanguard Information Technology ETF is one you want in your portfolio.