Not Sure What Stocks to Buy in 2024? Give These 2 Top Growth ETFs a Look. | The Motley Fool (2024)

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After a rough couple of years, tech stocks and growth companies have been heating up again. This is especially noticeable in the Nasdaq Composite, which is up nearly 50% since the start of 2023 -- notching a particularly strong rally to close out the year that has continued into January 2024. Even struggling mid-cap and small-cap stocks (as measured by the S&P 400 Index and the Russell 2000 Index, respectively) joined the party.

Data by YCharts.

However, as hope increases that a new bull market is only just beginning, you might struggle to decide which stocks to buy. Fret no more -- here are two top exchange-traded index funds (ETFs) for growth investors that are worth a look right now.

My two longtime favorite Vanguard index funds

The Vanguard Growth ETF (VUG 0.24%) and Vanguard Information Technology ETF (VGT 0.24%) are two of my oldest investments, and I'm still happy to hold on to them.

Let's start with the Vanguard Growth ETF. The index fund's portfolio is a collection of 208 growth stocks, heavily tilted toward U.S.-based mega-cap and large-cap companies, especially in the technology, consumer discretionary, and industrial sectors of the economy. While it hasn't quite matched the total return performance (price appreciation plus dividends reinvested) of the Nasdaq index, it has trounced the broader-based S&P 500 over the last decade.

Data by YCharts.

Some of the most powerful and recognizable brands in the world make up the bulk of this fund's holdings.

Data source: Vanguard.

Not all the stocks are mega-corporations, though the smallest businesses in the portfolio are still big brands in growth mode. The smallest holdings in the fund include semiconductor design software leaders Synopsysand Cadence Design Systems, data center operator Equinix, paint company Sherwin-Williams, and Chipotle Mexican Grill, with each stock at about 0.3% of Vanguard Growth's total portfolio.

In comparison, and for those investors who want more focused growth on technology (which really is touching all sectors of the economy these days), there's the Vanguard Information Technology ETF. Again, some of the world's most powerful companies dominate the top holdings. But Vanguard IT has 312 stocks in its portfolio, with a higher focus on software and semiconductors. Due to its sharper focus on the highest growth areas of the economy, this fund has walloped all market averages in the last decade.

Data by YCharts.

There is some overlap with the Vanguard Growth ETF, minus non-tech companies (including Alphabet and Meta, which were categorized as communications and consumer goods businesses starting in 2018, the consumer-facing Amazon and Tesla, and digital payments infrastructure providers Visa and Mastercard). The smallest holdings in the fund (many of them each less than 0.1% of the total portfolio) include dozens of small-cap and mid-cap stocks, businesses that could one day flame out, or become new investor favorites of the future.

Data source: Vanguard.

A close to no-fee bet on many secular growth trends

Both of these ETFs allow investors to get in on all the major developments moving the economy (from semiconductors to cloud computing, electric vehicles to e-commerce) without needing to choose which trends are the best to focus on. Along the way, you can work your way through the top holdings and learn more about what these businesses do, how they make money, and how they're profiting.

Besides not needing to pick winners among a large group of top performers, investors get an incredibly cheap investment vehicle in these two ETFs that won't dent investment performance. The Vanguard Growth ETF has just a 0.04% annual fee, and the Vanguard Information Technology ETF is just 0.1% a year -- meager respective fund costs of just $0.40 and $1 each year for every $1,000 invested.

Given their track record, low cost, and focus on top stocks around, these two ETFs still look like a great long-term buy to kick off 2024, especially for investors looking for a quick way to get started.