This ETF Casts a Wide Net on Growth

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.
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The first idea that might come to the mind of a rookie investor would be to invest in companies that seem most likely to grow significantly and benefit from a resulting rise in their share prices. The simple strategy is by no means a bad one. In fact, a number of exchange-traded funds (ETFs) use it effectively, and one of them is the iShares Russell 1000 Growth Index ETF (IWF).

IWF’s performance throughout 2014 resembles that of the S&P 500. The fund gained 11.24% for the year to perform in line with the S&P. Their prices seem to move together, which is logical given that both are measures of very broad market indices.

This year, however, they have deviated a bit, as IWF is up 3.44%, while the S&P is nearly flat. This difference may be due to IWF’s focus on growth stocks. Though they continue to experience gains and drops at the same time, IWF has featured larger gains and milder drops in 2015.

With $28.6 billion under management, this fund is among the largest trading today. Paying quarterly, the dividend yield of this ETF is 1.26%, more than covering its low expense ratio of 0.20%. The chart below shows the performance of this fund during the past 12 months.

IWF_031315

The technology sector accounts for 28.52% of IWF’s holdings. The next largest sectors featured in the fund are consumer discretionary, with 18.79% of the fund’s assets, and healthcare, at 14.50%.

IWF has 20.64% of its assets distributed amongst its 10 largest holdings. These include Apple Inc. (AAPL), 6.79%; Microsoft Corporation (MSFT), 2.07%; Verizon Communications Inc. (VZ), 1.82%; Coca-Cola (KO), 1.47%; and Google, Inc. Class C shares (GOOG), 1.44%.

If you want to cast a wide net on exposure to growth-oriented companies, iShares Russell 1000 Growth Index ETF (IWF) represents a potential way to accomplish this in one convenient core investment.

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If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

In case you missed it, I encourage you to read my e-letter column from last week about a gold ETF. I also invite you to comment in the space provided below.

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