Exclusion of a "Ten Titans" Stock and Three Other Major Growth Stocks from the Invesco QQQ Trust leaves a notable gap. A suitable ETF corrects this problem.
In the dynamic world of investment, choosing the right Exchange-Traded Fund (ETF) can be a daunting task. Two popular options for growth-focused investors are the Invesco QQQ Trust (QQQ) and the Vanguard family of ETFs, particularly the Vanguard S&P 500 Growth ETF (VUG) and the Vanguard Mega Cap Growth ETF (MGK).
The Invesco QQQ Trust mirrors the performance of the Nasdaq-100, an index consisting of the 100 largest non-financial companies listed on the Nasdaq Stock Exchange. However, it misses out on key growth stocks like Oracle and Eli Lilly, both of which are listed on the New York Stock Exchange (NYSE). On the other hand, Vanguard offers a range of low-cost ETFs, including the Vanguard Growth ETF (VUG), which includes growth stocks from both the Nasdaq and the NYSE.
The Vanguard S&P 500 Growth ETF (VUG) includes all the Ten Titans growth stocks, such as Nvidia, Microsoft, Apple, Alphabet, Amazon, Meta Platforms, Broadcom, Tesla, and Netflix, and fewer holdings than the Vanguard Growth ETF. In contrast, the Vanguard Mega Cap Growth ETF (MGK) takes the concentration a step further, with over half of the fund in just five stocks: Nvidia, Microsoft, Apple, Alphabet, and Amazon.
Eli Lilly, the largest healthcare company by market cap, is listed on the NYSE and not included in the Nasdaq-100. Despite not being part of the Nasdaq-100, Eli Lilly has a current market cap of $638 billion, and there are sound arguments for why its existing portfolio of weight management drugs and pipeline of drugs under development could increase its market cap past $2 trillion.
Meanwhile, Salesforce is investing heavily in agentic artificial intelligence (AI) to improve user efficiency across its customer relationship management software suite. ServiceNow is also expanding its AI tools as it continues to maintain rapid sales and free-cash-flow growth. Honeywell International, while a great value stock that pays a reliable dividend, may not be what some investors are looking for when targeting higher-octane growth stocks.
It's worth noting that the Invesco QQQ Trust has an expense ratio of 0.2%, which is higher than some other ETFs in today's era of ultra-low-cost ETFs. The Vanguard Growth ETF (VUG) and the Vanguard Mega Cap Growth ETF (MGK), managed by Vanguard, have expense ratios of 0.04%.
In conclusion, while the Invesco QQQ Trust offers exposure to the Nasdaq-100, investors may find more diverse growth opportunities with the Vanguard family of ETFs, which include both the Vanguard Growth ETF (VUG) and the Vanguard Mega Cap Growth ETF (MGK). As always, it's essential to conduct thorough research and consider individual investment goals before making any decisions.
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