In this article, we will discuss the 10 best performing growth ETFs in 2022. If you want to explore similar ETFs, you can take a look at 5 Best Performing Growth ETFs in 2022.
Growth stocks have been punished in 2022. The Fed’s aggressive rate hikes throughout the year panicked investors who abandoned ship and caused major sell offs in tech. The higher borrowing costs put a strain on tech companies’ future cash flows, making investors skeptical about growth companies’ ability to grow in such an environment. As of December 8, the tech-heavy Nasdaq Composite has lost roughly about a third of its value year to date, and going into 2023, investors are still being cautious around allocating capital to growth.
While growth stocks are a risky area to put your money in right now, for investors that are looking to gain exposure to growth but avoid the rampant volatility and high risk they come with, growth ETFs can be the answer. Growth ETFs are a type of exchange-traded fund that invests in growth stocks. Investors looking for higher returns and greater diversification than a traditional stock portfolio may choose to invest in growth ETFs.
Investing in growth ETFs can bring many benefits over investing in individual growth stocks. ETFs offer diversification and liquidity, allowing investors to access multiple stocks from a single purchase, without having to purchase each stock separately. ETFs also provide a lower cost of entry compared to buying individual stocks, since the fees associated with ETFs are typically much lower than the fees associated with buying individual stocks. Finally, ETFs offer more stability than individual stocks, as they are less volatile and less prone to sudden price movements. This stability can help investors mitigate risk, particularly during times of market volatility. Furthermore, ETFs are easier to track and manage, as they are typically linked to an index, such as the S&P 500 or the Nasdaq, which makes it easier to gauge performance.
This article will look at some of the best performing growth ETFs in 2022 through which investors can gain exposure to leading growth companies such as Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT), without being vulnerable to huge price swings.
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Our Methodology
To determine the 10 best performing growth ETFs in 2022, we screened for non-leveraged and non-inverse technology ETFs. We sorted them according to their year-to-date returns, as of December 8, and then ranked them in increasing order of their YTD returns. Along with each ETF, we have mentioned its YTD return, the index it tracks, its portfolio breakdown, and notable holdings.
Best Performing Growth ETFs in 2022
10. Global X Internet of Things ETF (NASDAQ:SNSR)
YTD Return as of December 8: -22.03%
The Global X Internet of Things ETF (NASDAQ:SNSR) is an exchange traded fund that uses a full replication technique to track the performance of the Indxx Global Internet of Things Thematic Index. The fund has an expense ratio of 0.68% and yields 0.59% to investors. As of December 8, the Global X Internet of Things ETF (NASDAQ:SNSR) has lost 22.03% year to date, outperforming the Nasdaq by roughly 8%, and is ranked among the 10 best performing growth ETFs in 2022.
The Global X Internet of Things ETF (NASDAQ:SNSR) invests in companies that belong to the IoT industry. These companies include wearable technology, home automation, connected automotive technology, and sensors companies among others. The Global X Internet of Things ETF (NASDAQ:SNSR) has 63 holdings and a top ten holdings concentration of 47.25%.
Skyworks Solutions, Inc. (NASDAQ:SWKS) is among the most prominent holdings of The Global X Internet of Things ETF (NASDAQ:SNSR). As of September 30, Millennium Management is the top investor in Skyworks Solutions, Inc. (NASDAQ:SWKS) and has a position worth $142.4 million.
On November 30, KGI Securities analyst Derek Chang upgraded Skyworks Solutions, Inc. (NASDAQ:SWKS) to Outperform from Neutral and reiterated his $130 price target on the shares.
Here is what Heartland Advisors had to say about Skyworks Solutions, Inc. (NASDAQ:SWKS) in its third-quarter 2022 investor letter:
“Before the risk-on rebound early in the quarter, we were searching for opportunities to shift from our defensive stance, looking for beaten-down, high-quality “early cycle” leaders. Existing holding, Skyworks Solutions, Inc. (NASDAQ:SWKS), represents one such opportunity that was added to on weakness.
Skyworks is one of two leading providers of radio frequency system components to smartphone makers and electronics manufacturers. With every step-up in product complexity, over the past two decades, the competitive landscape has shrunk while gross margins have increased significantly. 5G represents another such step-up, which is likely to increase how much Skyworks can make per smartphone.
Apple is a big customer, accounting for more than half of Skyworks’ sales. That customer concentration has depressed Skyworks’ valuation over time. More recently, fears surrounding a global recession and risk to consumer demand have further pressured valuation. However, the handset business is expected to benefit from 5G content, which may help offset some macroeconomic pressures. Away from the handset business, Skyworks’ growth is expected to accelerate thanks to other secular drivers such as WIFI 6 and growth of the industrial internet (i.e., “Internet of Things”).
At a P/E of less than eight and a 2.3% dividend yield, SWKS rarely gets this cheap, making this high-quality stock compelling for longterm investors.”
9. VanEck Israel ETF (NYSEARCA:ISRA)
YTD Return as of December 8: -21.02%
The VanEck Vectors Israel ETF (NYSEARCA:ISRA) invests in the public equity markets of Israel. The fund makes use of a full replication technique to track the performance of the BlueStar Israel Global Index. The VanEck Vectors Israel ETF (NYSEARCA:ISRA) has an expense ratio of 0.59% and is offering a yield of 1.66%.
As of December 8, the VanEck Israel ETF (NYSEARCA:ISRA) has lost 21.02% year to date and has outperformed the Nasdaq Composite by roughly 9%. The fund is placed on our list of the best performing growth ETFs in 2022. The VanEck Israel ETF (NYSEARCA:ISRA) has 112 holdings and a top ten holdings concentration of 49%.
One of the top holdings of the VanEck Israel ETF (NYSEARCA:ISRA) is Check Point Software Technologies Ltd. (NASDAQ:CHKP), a leading Israeli cybersecurity company. On November 2, Macquarie analyst Sarah Hindlian-Bowler took coverage of Check Point Software Technologies Ltd. (NASDAQ:CHKP) with a Neutral rating and a $129 price target.
At the close of Q3 2022, D E Shaw was the largest investor in Check Point Software Technologies Ltd. (NASDAQ:CHKP) and disclosed a position worth $105.28 million.
8. iShares Cybersecurity and Tech ETF (NYSEARCA:IHAK)
YTD Return as of December 8: -20.62%
The iShares Cybersecurity and Tech ETF (NYSEARCA:IHAK) invests in stocks of companies operating in the cyber security industry. The fund uses a representative sampling technique to track the returns of the NYSE FactSet Global Cyber Security Index. As of December 8, the iShares Cybersecurity and Tech ETF (NYSEARCA:IHAK) has lost 20.62% year to date and has outperformed the Nasdaq by over 9%. The fund is one of the best performing growth ETFs in 2022.
The iShares Cybersecurity and Tech ETF (NYSEARCA:IHAK) has an expense ratio of 0.47% and is yielding 0.80% to investors. The fund pays dividends on a semiannual basis. The iShares Cybersecurity and Tech ETF (NYSEARCA:IHAK) has 56 holdings and a top ten holdings concentration of 49.28%.
Among the top ten holdings of the iShares Cybersecurity and Tech ETF (NYSEARCA:IHAK), we have leading cybersecurity firm Palo Alto Networks, Inc. (NYSE:PANW). As of September 30, Arrowstreet Capital is the top investor in Palo Alto Networks, Inc. (NYSE:PANW) and has a position worth $464.28 million in the company.
On December 1, Redburn analyst Nina Marques took coverage of Palo Alto Networks, Inc. (NYSE:PANW) with a Buy rating and a $270 price target.
7. Invesco S&P 500 Equal Weight Technology ETF (NYSEARCA:RYT)
YTD Return as of December 8: -20.43%
The Invesco S&P 500 Equal Weight Technology ETF (NYSEARCA:RYT) invests in large-cap tech companies. The fund tracks the returns of the S&P 500 Equal Weight Information Technology Index and employs a full replication technique. The Invesco S&P 500 Equal Weight Technology ETF (NYSEARCA:RYT) has 77 holdings and a top ten holdings concentration of 15.34%. The fund’s assets under management, as of December 8, are valued at $2.14 billion and it has lost 20.43% year to date. The Invesco S&P 500 Equal Weight Technology ETF (NYSEARCA:RYT) has outperformed the Nasdaq Composite by over 9% and is placed among the best performing growth ETFs in 2022.
The Invesco S&P 500 Equal Weight Technology ETF (NYSEARCA:RYT) is offering a dividend yield of 0.63% and pays dividends on a quarterly basis. The fund’s expense ratio sits at 0.40%.
One of the top holdings of the Invesco S&P 500 Equal Weight Technology ETF (NYSEARCA:RYT) is GPU giant NVIDIA Corporation (NASDAQ:NVDA). As of September 30, Fisher Asset Management is the dominant investor in NVIDIA Corporation (NASDAQ:NVDA) and has stakes worth $1.46 billion in the company.
On November 17, Jefferies analyst Mark Lipacis maintained a Buy rating and his $225 price target on NVIDIA Corporation (NASDAQ:NVDA).
Here is what ClearBridge Investments had to say about NVIDIA Corporation (NASDAQ:NVDA) in its third-quarter 2022 investor letter:
“Likewise, graphics chip maker NVIDIA Corporation (NASDAQ:NVDA) (-19.9%) has struggled through the post-COVID-19 recovery but maintains dominant positions in key secular growth markets of AI and gaming. The company has significantly underperformed the index and semiconductor peers recently due to a gaming inventory correction, a decline in aggregate cryptocurrency demand and reduction in crypto mining intensity as well as concerns around the sustainability of data center sales.
We tactically trimmed our position early in 2022 due to concerns around these cycle dynamics but remain confident in the company’s long-term prospects.”
Some of the best-in-class names in tech include NVIDIA Corporation (NASDAQ:NVDA), Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT).
6. First Trust NASDAQ Technology Dividend Index Fund (NASDAQ:TDIV)
YTD Return as of December 8: -18.74%
The First Trust NASDAQ Technology Dividend Index Fund (NASDAQ:TDIV) is an exchange traded fund that tracks the returns of the NASDAQ Technology Dividend Index by leveraging a full replication technique. The fund has an expense ratio of 0.50% and is offering a yield of 2.48%. The fund distributes dividends on a quarterly basis.
As of December 8, the First Trust NASDAQ Technology Dividend Index Fund (NASDAQ:TDIV) has lost 18.74% year to date, outperforming the Nasdaq composite by over 12%. The fund ranks among the best performing growth ETFs in 2022. The First Trust NASDAQ Technology Dividend Index Fund (NASDAQ:TDIV) has 95 holdings and a top ten holdings concentration of 57.75%.
Oracle Corporation (NASDAQ:ORCL) is among the top ten holdings of the First Trust NASDAQ Technology Dividend Index Fund (NASDAQ:TDIV). On December 5, Barclays analyst Raimo Lenschow raised his price target on Oracle Corporation (NASDAQ:ORCL) to $81 from $70 and maintained an Equal Weight rating on the shares.
As of the close of Q3 2022, First Eagle Investment Management is the dominant shareholder in Oracle Corporation (NASDAQ:ORCL) and has stakes worth $1.58 billion in the company.
Here is what First Eagle Investments had to say about Oracle Corporation (NASDAQ:ORCL) in its second-quarter 2022 investor letter:
“Oracle is one of the world’s largest independent enterprise software companies and has been reinventing itself for the cloud-computing environment, a transition pursued primarily through investments in organic research and design and smallish, well-priced acquisitions. That said, Oracle in June closed its largest-ever deal with the acquisition of Cerner, a designer of software to store and analyze medical records and other healthcare data.
Oracle took on additional debt to finance this all-cash acquisition and as a result plans to moderate its stock-buyback program to focus on debt reduction. Despite the weak quarter for the stock, Oracle’s operations remain strong; it reported better- than-expected results for its most recent quarter and issued upbeat guidance for the coming fiscal year.”
In addition to Oracle Corporation (NASDAQ:ORCL), by investing in growth ETFs, risk-averse investors can gain exposure to leading tech companies such as Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT).
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Disclosure: None. 10 Best Performing Growth ETFs in 2022 is originally published on Insider Monkey.