Over the past 15 years, growth stocks have significantly outperformed both value stocks and the broader U.S. stock market. A backtest comparing the Vanguard Growth ETF (ticker: VUG), Vanguard Value ETF (VTV) and Vanguard S&P 500 ETF (VOO) shows that VUG nearly doubled the ending value of VTV and handily beat VOO as well.
From September 2010 to July 2025, VUG returned 16.8% annually, compared to 12.1% for VTV and 14.5% for VOO. While this outperformance came with higher volatility, VUG still delivered better risk-adjusted returns with a Sharpe ratio of 0.81, higher than both VTV (0.69) and VOO (0.79).
The reasons for growth’s dominance lie in both portfolio construction and macroeconomic support. On the stock selection side, VUG leans heavily into innovation, with 60.4% of its assets in the tech sector.
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Its top 10 holdings currently include all “Magnificent Seven” stocks: Microsoft Corp. (MSFT), Meta Platforms Inc. (META) Nvidia Corp. (NVDA), Apple Inc. (AAPL), Alphabet Inc. (GOOG, GOOGL), Amazon.com Inc. (AMZN) and Tesla Inc. (TSLA). These companies have driven much of the market’s total return over the past decade.
Growth-focused funds like VUG also favor screening for metrics such as high earnings growth and above-average return on equity, which have been consistently stronger than value-tilted funds.
“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 and wealth advisor at Regency Wealth Management.
Finally, the prevailing macroeconomic environment has played a key role. The post-2008 financial crisis period featured low interest rates and aggressive monetary easing, conditions that disproportionately benefited growth companies.
“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.
These effects intensified during the COVID-19 pandemic, when fiscal stimulus and emergency monetary policy injected even more liquidity into the financial system. Even with a brief reversal in 2022 due to rising rates and inflation, the current macro backdrop remains supportive for growth stocks.
Here are seven of the best growth mutual funds and exchange-traded funds (ETFs) to buy in 2025:
| Fund | Expense ratio |
| Fidelity Blue Chip Growth Fund (FBGRX) | 0.47% |
| Fidelity Contrafund (FCNTX) | 0.63% |
| Fidelity Magellan Fund (FMAGX) | 0.56% |
| iShares Russell 1000 Growth ETF (IWF) | 0.19% |
| Invesco Nasdaq 100 ETF (QQQM) | 0.15% |
| Invesco S&P 500 Pure Growth ETF (RPG) | 0.35% |
| Invesco S&P 500 GARP ETF (SPGP) | 0.36% |
Fidelity Blue Chip Growth Fund (FBGRX)
Some growth funds, like FBGRX, make their strategy clear right in the name. This actively managed Fidelity fund is a staple in many 401(k) plans and focuses on companies it defines as “well-known, well-established and well-capitalized.” The portfolio holds just over 300 stocks and is notably top-heavy. The 10 largest positions make up 60.2% of assets, including a 15.2% allocation to Nvidia alone.
FBGRX has been a consistent outperformer under manager Sonu Kalra, who has led the fund since 2009. It has outpaced both the Russell 1000 Growth Index and the Morningstar large growth category average over the long term. The 0.47% expense ratio is reasonable for an actively managed fund, but investors should be aware of large taxable capital gains distributions in December due to its higher portfolio turnover.
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.”
FCNTX is a good example of why it pays to read the fine print. Despite the name, this is not a classic contrarian strategy. Under longtime manager William Danoff, who has run the fund since 1990, FCNTX has consistently outperformed the S&P 500. Danoff is known for taking high-conviction, concentrated positions in growth stocks. At the moment, that includes an 18.1% allocation to Meta Platforms.
Fidelity Magellan Fund (FMAGX)
FMAGX dates back to 1963 and stands as one of Fidelity’s oldest active mutual funds. It rose to fame under Peter Lynch, who delivered standout returns using a growth at a reasonable price (GARP) strategy combined with his famous “buy what you know” philosophy. After Lynch’s departure, however, the fund struggled under subsequent managers, who were criticized for not owning a truly active portfolio.
Since 2019, FMAGX has been managed by Sammy Simnegar, who has revitalized the fund as a more concentrated, growth-focused strategy. It currently holds just 51 stocks and has significant exposure to the Magnificent Seven. Over the trailing three-year period, the fund has outperformed the S&P 500, though it still lags the Morningstar large-cap growth peer category average.
iShares Russell 1000 Growth ETF (IWF)
Consistent outperformers like FCNTX and FBGRX are rare. The majority of actively managed funds underperform their benchmarks over the long run. For investors who prefer a passive alternative, IWF offers broad growth exposure without relying on stock-picking skill. This ETF tracks the Russell 1000 Growth Index, which uses a rules-based approach to select growth-oriented stocks.
Over the trailing 10 years, IWF returned 16.8% annually with dividends reinvested, before taxes. Thanks to the ETF structure, tax drag has been minimal since funds like IWF can avoid capital gains distributions through in-kind creation and redemption. The fund pays a modest 30-day SEC yield of 0.4% and is significantly cheaper than most active funds, with a 0.19% expense ratio.
[Read: How to Pay Taxes on Investment Income]
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 product ETF strategy at Invesco. Over time, the Nasdaq’s focus on attracting innovative, tech-driven firms has led to a heavy concentration of high-growth issuers. As a result, ETFs that track the Nasdaq-100 index have become de facto growth strategies.
Invesco offers more than one Nasdaq-100 ETF. The older and more widely traded option is the Invesco QQQ Trust (QQQ), but QQQM was launched as a lower-cost alternative for buy-and-hold investors. QQQM charges a 0.15% expense ratio, compared to 0.2% for QQQ. For long-term investors focused on cost, QQQM is often the better pick. However, traders who plan to use options may prefer QQQ.
Invesco S&P 500 Pure Growth ETF (RPG)
“RPG provides access to the most growthy stocks in the S&P 500 Index,” Kalivas explains. “Stocks in the S&P 500 are separated by their style (growth and value), and then the stocks with the highest growth score are selected in RPG.” Unlike the earlier S&P 500-style indexes, RPG features no overlap with value stocks found in its counterpart, the Invesco S&P 500 Pure Value ETF (RPV).
“The stocks in RPG are weighted by their growth score, so that the companies with the highest growth score receive the largest weight within the portfolio,” Kalivas says. The result is a fairly concentrated portfolio of 94 holdings, but one that is less top-heavy than many active and index-based growth funds. RPG charges a 0.35% expense ratio and is fairly tax efficient, with a low 0.2% 30-day SEC yield.
Invesco S&P 500 GARP ETF (SPGP)
Peter Lynch stepped down as manager of FMAGX in 1990, but investors today can still access a variant of his GARP strategy through SPGP, albeit in an objective, index-based form instead of stock-picking prowess. The fund tracks the S&P 500 GARP Index, which uses statistical techniques to select 75 S&P 500 stocks that score highest on a composite screen blending growth, quality and value factors.
“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 explains. Unlike many growth funds, SPGP’s portfolio is relatively balanced, with no single name dominating the fund. It charges a 0.36% expense ratio and pays a tax-efficient 0.7% 30-day SEC yield.
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Update 07/21/25: This story was previously published at an earlier date and has been updated with new information.
