Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some large-cap growth stocks to your portfolio, the iShares Russell 1000 Growth Index ETF could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.
ETFs often sport lower expense ratios than their mutual fund cousins. The iShares ETF's expense ratio -- its annual fee -- is a very low 0.20 %. It yields about 1.7%, too.
This ETF has performed reasonably, inching ahead of the S&P 500 over the past three and 10 years, and beating it handily over the past five. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.
Why large companies?
Large companies can add some ballast to your collection. Many may not grow as briskly as their smaller counterparts, but in order to reach their current size, they likely have some strong assets and features. And some can grow quite briskly, too.
More than a handful of large-cap growers had strong performances over the past year. Gilead Sciences surged 65%, with a strong lineup of HIV drugs and a promising pipeline featuring more, as well as Hep C, cancer, and other drugs. It's also in a good position, with few patents expiring in the next few years.
Philip Morris International gained 25%. With smoking rates falling in the U.S. and rising abroad, the company is well positioned to profit. It sports an attractive 3.8% dividend yield, but doesn't appear to be priced near bargain levels at the moment. It's also likely that, just as in the U.S., regulations and taxes on tobacco will increase, challenging the company.
UPS , which yields 2.8%, advanced 10%. Many were bullish on the company's global expansion, via an acquisition of Europe's largest package deliverer, TNT, but that deal was recently nixed by regulators. UPS may still grow well, though, as it hikes prices and perhaps negotiates better deals with partners.
Other companies didn't do as well last year, but could see their fortunes change in the coming years. Intel shed 17%, but looks attractive to many with its forward P/E of 9 and dividend yield of 4.2%. Folks are watching to see how successful its new mobile offerings are, as the maturing PC market has hurt the company. The giant still has competitive advantages, though, and its Ultrabooks, which draw much less power than before, are compelling.
The big picture
A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.
The article Get Your Large Growers Here originally appeared on Fool.com.
Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Intel and Gilead Sciences. The Motley Fool recommends Gilead Sciences, Intel, and United Parcel Service. The Motley Fool owns shares of Intel and Philip Morris International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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