5 Small Cap Growth ETFs

3. iShares Morningstar Small-Cap Growth ETF (NYSE:ISCG)

YTD Return as of September 14: 12.3%

5-Year Return as of September 14: 12.1%

iShares Morningstar Small-Cap Growth ETF (NYSE:ISCG) is an exchange traded fund that invests in small capitalization companies that have exhibited above-average growth characteristics. The fund invests at least 80% of net assets in these firms. 

iShares Morningstar Small-Cap Growth ETF (NYSE:ISCG) holds a large stake in Vertiv Holdings Co (NYSE:VRT), a firm that designs, manufactures, and services critical digital infrastructure technologies and life cycle services. Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Starboard Value LP is a leading shareholder in Vertiv Holdings Co (NYSE:VRT) with 15.9 million shares worth more than $394 million. 

In its Q2 2023 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Vertiv Holdings Co (NYSE:VRT) was one of them. Here is what the fund said:

“Vertiv Holdings Co (NYSE:VRT) provides critical digital infrastructure for data centers. Its shares rose sharply after Vertiv reported strong earnings, featuring 35% organic sales growth and increased 2023 guidance, which helped improve management credibility regarding margin expansion plans. In addition, the stock’s trading multiple increased on the belief that Vertiv stands to benefit from generative AI-related data center investments. Generative AI will require an increase in energy density due to the need for additional computing power, which, in turn, will necessitate new cooling solutions. Vertiv should be able to leverage its leadership position in air cooling, strong relationships with customers, and dominant service network to gain share and grow rapidly. We believe Vertiv’s earnings power will increase as the company closes the margin gap with peers and revenue grows on the back of increased investments in data centers.”