This Low-Cost ETF Has Been Beating the Market

One of the common drawbacks of investing in large exchange-traded funds (ETFs) is that while they might provide you with safety and diversification, your returns may end up being modest. But one ETF that is an exception to that is the Vanguard Growth Index Fund (NYSE Arca: VUG).

Over the past 12 months, this ETF has generated returns of 23% -- well above the S&P 500's 9% gains during the same stretch. Growth stocks took a beating for much of 2022 but they have been rebounding well this year, and so it's little surprise that a growth-oriented ETF has been doing well.

The fund has 240 stocks with big names such as Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) each accounting for more than 12% of its total weight. Tech does play a big part of the fund, representing close to half of the total weight. However, consumer discretionary and industrials are also sectors that make up more than 10% of the ETF, so this is certainly more than just a tech-focused ETF.

Another reason investors should love the fund is that it has a miniscule expense ratio of just 0.04%. This is an ETF that won't eat up your returns with high fees, making it an attractive option to just buy and hold. Over the long run, growth stocks typically outperform the markets and while they have been rallying of late, there's still lots more upside for these types of investments, which is why it's not too late to add this ETF to your portfolio.