Value ETFs or Growth ETFs: What Should You Choose

Are you looking to build your investment portfolio? If yes, you might have come across two broad categories of ETFs, i.e., growth and value. Value investing and growth investing are two different investing styles. Value ETFs involve investing in stocks that are undervalued. However, Growth ETFs focus more on investing in more volatile stocks with hopes pf getting above-average returns. Having both growth and value ETFs in your portfolio can reduce risks and offer diversification benefits.

However, if you thinking about which one should you choose, you have come to the right place. Here, we’ll tell you what you need to know about value and growth ETF investing so that you can make an educated decision.

Value ETF Investing

As already said, value investing focuses on finding undervalued stocks. Unlike growth investors, value investors pay attention to earnings, stable cash flows, minimal debt, etc. They use this information to check a company’s intrinsic value and its future earning potentials. Also, value investors focus on the overall industry metrics and gather additional insights.

Value ETF funds are a low-cost option for investors to get access to a range of investment themes or diversify your portfolio. With the best value ETFs, you get stocks that are managed by professionals and free up the investors from the tedious task of digging through balance sheets, analysis, or research reports.

Also, when you get a value ETF, like Alpha Architect ETF, a fund manager could buy or sell securities that meet criteria. By reading all this information, you get to know whether asset allocation, management fees, portfolio holdings, or other things that match your financial goals.

Some Top Value ETFs

ETF funds market is continually growing. Clearly, investors have access to several options; some are broad, while other options are very specific. Some of the most popular value ETFs are-

Vanguard Value ETF (VTV)

The Vanguard Value ETF is overall the best option for investors who are looking to diversify their portfolio with value stocks. This prominent value ETF has around $88 billion assets under managJohnson, etc.

iShares Russell 1000 Value ETF

IWD is another popular option wement. Vanguard Value ETFs has more assets under management and track the CRPS Large Cap Value Index by investing in the component companies. The top holdings include Warren Buffet’s company BRK.B, Procter & Gamble, Johnson & ith about $56 billion assets under management. Some of the top companies in its list include Exxon Mobil, JPMorgan, etc.

Growth ETF Investing

Growth investing ETF is a strategy focused on stocks that are supposed to give huge returns. Or, the stocks where companies are expected to grow profits and sales, and generate returns. Value investors focus on steady income, and growth investors plan to invest in shares that could outperform in the future. Some of the most popular growth ETFs include Tesla, Netflix, Alphabet, etc.

There is a plethora of growth stocks that have seen a massive gain in prices, but eventually sink. This could be one significant reason why growth investing is potentially more volatile compared to value investing. Growth investors concern less about metrics, like debt levels, or cash at hand, expecting the growth companies to invest in the businesses.

Top Growth ETFs

Investors have so many options focusing on growth investments across industries. Below are some of the most popular growth ETFs-

Vanguard Growth ETF

Overall, VUG is one of the best growth ETFs with around $87 billion worth assets. These funds invest in Microsoft, Facebook, and Apple in the top list. Clearly, all these funds’ holdings are American companies.

iShares Russell 1000 Growth ETF (IWF)

IWF is another great growth ETF option that manages around $76 billion assets. Some top holdings in IWF include shares of Tesla, Visa, and NVIDIA.

Which One Should You Choose?

Well, both the investment strategies can give amazing returns. But, if you face difficulty enduring market fluctuations, it is best to stick to a value ETF. On the other hand, if you are comfortable with volatility, you can prefer growth ETFs that could help you achieve above-average returns.