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The artificial intelligence revolution is making growth stocks a must-have in portfolios.
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The Magnificent Seven stocks are driving much of the innovation and growth at the moment, but opportunities also exist in smaller companies.
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Vanguard Growth ETF (VUG) offers the best combination of coverage and cost.
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10 Stocks We Like Better Than Vanguard Index Funds – Vanguard Growth ETF ›
The economic landscape is changing as we head into 2026, but one thing that remains unchanged is the leadership of growth stocks. After a shaky start to 2025, growth stocks were able to reestablish themselves, driven by healthy earnings and a resilient US economy.
Over the long term, growth equities deserve a meaningful place in your portfolio. After all, there is a lot of innovation, investment, and progress happening here. But to invest well in this theme, you need to look for companies that deliver results, not just hope.
That’s why the Vanguard Growth ETF (NYSEMKT: VUG ) It deserves a long-term place in your portfolio.
VUG tracks CRSP US Large Cap Growth Index. The index starts from a universe covering about 85% of the total market capitalization of the US equity market. It then pulls out the best combination of growth attributes, including revenue growth, sales growth, and return on assets (ROA).
It still has significant exposure to Magnificent Seven stocks, but its larger startup universe allows for the inclusion of smaller, faster-growing companies. Its expense ratio of just 0.04% is the lowest you’ll find in this category.
Not surprisingly, tech makes up a whopping 63% of the portfolio, and the Magnificent Seven makes up about 54%.
Skeptics may point to concentration risk as a problem with VUG. I don’t see it as much of a problem in the current environment.
Mega cap companies are outperforming with the largest share of revenue and earnings growth due to the artificial intelligence (AI) revolution. They have been clear winners because of size, scale, efficiency, and resources.
The AI boom is likely to remain a dominant theme for many years, so why not overweight companies that are leaders in this space? As the development of AI deepens and widens, we can expect many more winners to emerge.
VUG offers the best of both worlds. You will find today’s current leaders and future winners emerging from the small company universe. The fund currently has about 160 stocks, so there’s plenty of scope for inclusion beyond the big names.
