In this article, we discuss the 5 small cap growth ETFs. If you want to read about some more growth ETFs, go directly to 10 Small Cap Growth ETFs.
5. iShares Russell 2000 Growth ETF (NYSE:IWO)
YTD Return as of September 14: 9.5%
5-Year Return as of September 14: 6.5%
iShares Russell 2000 Growth ETF (NYSE:IWO) is a fund that tracks the performance of the Russell 2000 Growth Index. The fund invests in companies that have economic characteristics that are substantially identical to the component securities of the underlying index.
One of the biggest holdings of iShares Russell 2000 Growth ETF (NYSE:IWO) is ChampionX Corporation (NASDAQ:CHX), a company that provides chemistry solutions, and engineered equipment and technologies to oil and gas companies. At the end of the second quarter of 2023, 24 hedge funds in the database of Insider Monkey held stakes worth $272 million in ChampionX Corporation (NASDAQ:CHX), compared to 25 in the preceding quarter worth $336 million.
In its Q4 2022 investor letter, Alger Capital, an asset management firm, highlighted a few stocks and ChampionX Corporation (NASDAQ:CHX) was one of them. Here is what the fund said:
“ChampionX Corporation (NASDAQ:CHX) provides equipment and services that assist in the drilling. completion and production phases of well drilling. The company also provides production and reservoir chemicals, along with highly engineered equipment and technologies, such as artificial lift and drill bit inserts, for the oil and gas industry. Notably, ChampionX has a global footprint and favorable product mix, where its chemicals and artificial lift businesses are tied to the production phase of the life of a well. We believe this produces lower earnings variability and potentially stronger operating results. Shares outperformed during the quarter as the company reported strong fiscal third quarter results and gave better-than-expected fourth quarter guidance. Moreover, the company expanded its capital return program by committing to return 60% of its free cash flow (FCF) to shareholders through opportunistic buybacks. Management also raised its share buyback authorization program from $250m to $750m over next 2 to 3 years. We believe the company is well positioned to deliver strong revenue growth, driven by their production focused Performance Chemicals business, which may lead to margin improvement and FCF generation.”
4. Vanguard Russell 2000 Growth Index Fund (NASDAQ:VTWG)
YTD Return as of September 14: 9.5%
5-Year Return as of September 14: 6.6%
Vanguard Russell 2000 Growth Index Fund (NASDAQ:VTWG) is a fund that tracks the performance of the Russell 2000 Growth Index. The index is designed to measure the performance of small capitalization growth stocks in the United States.
One of the biggest holdings of Vanguard Russell 2000 Growth Index Fund (NASDAQ:VTWG) is Super Micro Computer, Inc. (NASDAQ:SMCI), a firm that develops and manufactures high performance server and storage solutions based on modular and open architecture. At the end of the second quarter of 2023, 37 hedge funds in the database of Insider Monkey held stakes worth $628 million in Super Micro Computer, Inc. (NASDAQ:SMCI), compared to 36 in the preceding quarter worth $733 million.
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.”
2. Vanguard Small Cap Growth Index Fund (NYSE:VBK)
YTD Return as of September 14: 12.3%
5-Year Return as of September 14: 17.6%
Vanguard Small Cap Growth Index Fund (NYSE:VBK) is an exchange traded fund that invests at least 80% of net assets in companies on the CRSP US Small Cap Growth Index. The index comprises small cap firms in the US that exhibit growth characteristics.
One of the biggest holdings of the Vanguard Small Cap Growth Index Fund (NYSE:VBK) is Fair Isaac Corporation (NYSE:FICO), a firm that develops analytic, software, and data decisioning technologies. Among the hedge funds being tracked by Insider Monkey, Pennsylvania-based investment firm Valley Forge Capital is a leading shareholder in Fair Isaac Corporation (NYSE:FICO) with 943,048 shares worth more than $763 million.
In its Q2 2023 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Fair Isaac Corporation (NYSE:FICO) was one of them. Here is what the fund said:
“Shares of Fair Isaac Corporation (NYSE:FICO), a data and analytics company that helps predict consumer behavior, contributed to performance. The company reported solid quarterly financial results and modestly raised its full-year outlook while taking a more conservative approach to guidance due to macroeconomic uncertainty. CEO Will Lansing sounded confident that the business can hold up well across various macro backdrops and sounded particularly excited about the momentum in the software business. We retain conviction and believe that FICO will be a steady earnings compounder, which should drive solid returns for the stock over the long term.”
1. Janus Henderson Small Cap Growth Alpha ETF (NASDAQ:JSML)
YTD Return as of September 14: 13.7%
5-Year Return as of September 14: 12.3%
Janus Henderson Small Cap Growth Alpha ETF (NASDAQ:JSML) is an exchange traded fund that tracks the performance of the Solactive Small Cap Index, an index which comprises a universe of 2,000 small-sized capitalization stocks. The fund invests at least 80% of net assets in these stocks.
A key holding of the Janus Henderson Small Cap Growth Alpha ETF (NASDAQ:JSML) is Amkor Technology, Inc. (NASDAQ:AMKR), a firm that provides outsourced semiconductor packaging and test services. At the end of the second quarter of 2023, 26 hedge funds in the database of Insider Monkey held stakes worth $190 million in Amkor Technology, Inc. (NASDAQ:AMKR), compared to 21 in the preceding quarter worth $230 million.
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