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7 of the Best Growth Funds to Buy and Hold

Some of the most popular funds, like the Vanguard S&P 500 ETF (ticker: VOO), make key portfolio metrics easily accessible to investors.

For example, Vanguard’s webpage for VOO highlights essential details, including the fund’s average earnings growth rate, price-to-earnings ratio (P/E), price-to-book ratio (P/B) and return on equity (ROE).

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The earnings growth rate measures how quickly the companies in the portfolio are growing their profits — in general, higher is better.

The P/E ratio shows how much investors are paying for every dollar of earnings generated by these companies. The P/B ratio, on the other hand, compares a stock’s market price to its book value, which represents the company’s net assets — its total assets minus liabilities.

Finally, ROE measures how effectively a company uses shareholders’ equity to generate profits, signaling efficiency and profitability.

Currently, VOO boasts a 19.8% earnings growth rate, a P/E of 27.7, a P/B of 4.9 and a 24.6% ROE. These metrics are critical to understand because they help investors discern the types of stocks within a fund.

While VOO is classified as a blended fund, holding both growth and value stocks, its elevated P/E and P/B ratios, combined with its above-average ROE and earnings growth rate, show a clear tilt toward growth stocks at this time.

But if you look at a true growth fund, like the Vanguard Growth ETF (VUG), this tilt becomes even more pronounced. VUG’s portfolio has a much higher 26.5% earnings growth rate, a P/E of 40.9, a P/B of 12.4 and an impressive 38.4% ROE.

These numbers reflect a portfolio heavily weighted toward high-growth companies, where investors are willing to pay a premium for the potential of faster revenue and earnings expansion.

“Since some growth stocks typically do not generate positive earnings until later in their business stage, metrics such as price-to-earnings, dividend yield and earnings yield tend to be less relevant,” says Mark Andraos, partner at Regency Wealth Management.

Once you understand these metrics, screening for growth funds becomes much easier. Even if a fund provider doesn’t publish this data directly, third-party sources like Morningstar can often provide it. With this knowledge, you can confidently identify true growth funds.

Here are seven of the best growth mutual funds and exchange-traded funds (ETFs) to buy in 2025:

Fund Expense ratio
iShares Russell 1000 Growth ETF (IWF) 0.19%
Fidelity Contrafund (FCNTX) 0.39%
Fidelity Blue Chip Growth Fund (FBGRX) 0.47%
SPDR Portfolio S&P 500 Growth ETF (SPYG) 0.04%
Invesco Nasdaq 100 ETF (QQQM) 0.15%
Invesco S&P 500 GARP ETF (SPGP) 0.36%
Xtrackers S&P 500 Growth ESG ETF (SNPG) 0.15%

iShares Russell 1000 Growth ETF (IWF)

“Growth stocks have benefited greatly from a decade of near-zero interest rates, as they were able to issue debt at low rates to help fund their operations,” Andraos says. This provided many growth companies, especially those in the technology sector, with cheap capital to expand via investments in research and development or mergers and acquisitions.

As a result, the top holdings of popular growth ETFs like IWF are dominated by technology stocks. In fact, all of the “Magnificent Seven” stocks — Nvidia Corp. (NVDA), Microsoft Corp. (MSFT), Apple Inc. (AAPL), Amazon.com Inc. (AMZN), Meta Platforms Inc. (META), Alphabet Inc. (GOOGL), and Tesla Inc. (TSLA) are featured in the ETF’s top holdings. IWF charges a 0.19% expense ratio.

Fidelity Contrafund (FCNTX)

“For actively managed growth funds, a prospective investor should first look at the fund objective and description to understand if this fund is appropriate for their investing style and risk tolerance,” says Geoff Strotman, senior vice president at Segal Marco Advisors. “They should also understand the track record and experience of the firm and team managing the fund.”

One of the longest tenured and most successful growth funds is FCNTX. Despite starting off with a more contrarian strategy, it has since morphed into a large-cap growth fund. Overseen by portfolio manager William Danoff since 1990, FCNTX has outperformed the S&P 500 over 10-, five-, three- and one-year trailing periods. The fund charges a 0.39% expense ratio.

Fidelity Blue Chip Growth Fund (FBGRX)

FCNTX isn’t the only outperforming Fidelity fund. A longstanding and popular alternative is FBGRX, which invests in growth stocks deemed by Fidelity to be “well-known, well-established and well-capitalized.” It has been managed by Sonu Kalra since 2009 and currently charges a 0.47% expense ratio. As with most Fidelity funds, FBGRX has no minimum required investment, making it very accessible.

Historically, FBGRX has performed quite well. Over the trailing 10- and five-year periods, the fund delivered 18.1% and 21.6% annualized returns, respectively. These figures beat both the Russell 1000 Growth Index and the Morningstar “large growth” peer category over the same periods. However, investors should note that FBGRX has a relatively high 22% portfolio turnover rate. This creates large and frequent capital gains distributions, which makes it less tax-efficient than its more passive peers.

SPDR Portfolio S&P 500 Growth ETF (SPYG)

“The Russell 1000 Growth Index has 47% of the portfolio in the technology sector and almost 22% weight in the two largest stocks in that sector,” Strotman says. For a more diversified alternative, investors can opt for funds tracking the S&P 500 Growth Index. This index allocates about 38% to technology companies, with the top two holdings, Nvidia and Microsoft, accounting for 18.4% between them.

Investors can track this benchmark cheaply via SPYG. This ETF is part of the SPDR “Portfolio” lineup, a family of low-cost index ETFs designed to provide affordable core equity exposure. At a 0.04% expense ratio, it is one of the cheapest growth ETFs on the market. Over the trailing 10 years, SPYG has delivered a competitive 15.2% annualized return (based on net asset value) despite its simplicity and affordability.

Invesco Nasdaq 100 ETF (QQQM)

“QQQM provides access to the 100 largest non-financial companies listed on the Nasdaq exchange,” says Nick Kalivas, head of factor and core equity ETF strategy at Invesco. While not explicitly a growth-focused index, the Nasdaq-100’s higher-than-average concentration of technology sector companies has created a natural tilt toward large companies with higher-than-average earnings growth rates.

QQQM’s top holdings include all of the “Magnificent Seven” stocks in addition to other notable tech names like Broadcom Inc. (AVGO) and Netflix Inc. (NFLX). With an inception date of late 2020, there’s not a ton of long-term data yet on the fund, but over the trailing three-year period, QQQM has posted a 9.6% annualized return, outperforming even the respected S&P 500, which returned 8.9% on an annualized basis over that time. QQQM charges a reasonable 0.15% expense ratio and also pays a humble 0.6% SEC 30-day yield.

Invesco S&P 500 GARP ETF (SPGP)

Legendary investor Peter Lynch developed his growth-at-a-reasonable-price (GARP) strategy as a way to balance the potential for high returns from growth stocks with the discipline of value investing. GARP was influenced by his belief that overpaying for even the fastest-growing companies could lead to disappointing long-term returns. To put a variant of this strategy into play, investors can buy SPGP.

“SPGP offers a differentiated return and risk profile from traditional growth funds, which are agnostic to a company’s quality characteristics and avoid focusing on valuation measures,” Kalivas says. It tracks the S&P 500 Growth at a Reasonable Price Index, which isolates about 75 stocks with the best growth, quality and value composite scores. SPGP charges a 0.36% expense ratio.

Xtrackers S&P 500 Growth ESG ETF (SNPG)

Growth investors prioritizing environmental, social and governance (ESG) considerations don’t have to settle for mediocre returns. A great example is SNPG, which since its inception in November 2022 has returned 33.1% on an annualized basis. This ETF tracks the S&P 500 Growth ESG Index for a reasonable 0.15% expense ratio.

“SNPG could be an excellent solution for investors who believe in the continuing strength of the Magnificent Seven, as these stocks compose 61% of the ETF,” notes Arne Noack, regional investment head of Xtrackers, Americas, at DWS Group. “As with all of our Xtrackers ESG ETFs, SNPG’s methodology maintains weightings largely in line with the S&P 500 Growth Index and avoids sector tilts.”

[READ: 10 Best Growth Stocks to Buy for 2025]

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7 of the Best Growth Funds to Buy and Hold originally appeared on usnews.com

Update 01/29/25: This story was previously published at an earlier date and has been updated with new information.

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