Why Recessions Forge Great CEOs Who Think Beyond Cost-Cutting
04/15/2025
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But the CEOs who make history in downturns aren’t the ones with the deepest cuts
Investors seeking exposure to growth stocks with minimal expense ratios may find the Vanguard Growth ETF (NASDAQ: VUG) attractive. This exchange-traded fund (ETF) has garnered attention for its strong performance in 2024, exceeding the returns of the S&P 500 and the Nasdaq Composite Index. Furthermore, VUG boasts a remarkably low expense ratio, making it a cost-effective investment in a basket of high-growth companies.
VUG tracks the CRSP US Large Cap Growth Index, exposing investors to a diversified portfolio of leading U.S. growth companies. These companies are typically characterized by high valuations based on their future earnings potential rather than their current profitability. VUG’s holdings encompass a variety of sectors, including technology, consumer discretionary, and healthcare, offering investors broad exposure to the growth segment of the U.S. stock market.
As of June 18, 2024, VUG has delivered a year-to-date return exceeding 20%, surpassing the performance of both the S&P 500 and the Nasdaq Composite Index. This outperformance highlights the potential of growth stocks to generate significant returns, particularly during periods of economic expansion.
However, it is crucial to acknowledge the inherent risks associated with growth stocks. These companies often trade at premium valuations, making them more susceptible to market downturns and unexpected changes in economic conditions. VUG’s historical performance does not guarantee future results, and investors should carefully consider their risk tolerance before investing in this ETF.
A significant advantage of VUG lies in its remarkably low expense ratio. With an expense ratio of 0.04%, a $20,000 investment in VUG translates to a mere $8 in annual fees. This low-cost structure allows investors to retain a greater portion of their returns than actively managed funds that typically charge higher fees.
In conclusion, the Vanguard Growth ETF presents an intriguing option for investors seeking exposure to high-growth companies at a minimal cost. Its strong performance in 2024 demonstrates the potential of growth stocks to generate significant returns. However, investors should be aware of the inherent risks associated with this asset class and carefully evaluate their risk tolerance before investing in VUG.
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