Key takeout
- Since peaking in early December, US growth stocks have fallen sharply.
- Almost all US growth ETFs have declined by the year.
- Small and medium-sized growth ETFs have taken more intense hits than big caps.
As investors are increasingly concerned about the economic outlook amid the rise of the trade war, funds focused on growth stocks have plummeted over the last few weeks. On Monday, growth stocks were the most intense hit segment of the Morningstar Style box, with massive growth down around 4.4%, cap medium-term growth down 3.5%, and slight growth down 3.2%.
Of the funds traded on 100 diversified US stock exchanges with assets of over $100 million tracked by MorningStar Direct, all are down. Morning Star US Growth Index It peaked on December 6th, 2024. Since that day, the index has dropped by 12% until the end of Friday. The worst performance in this time frame was the $293 million Alpha Architect US quantitative momentum fund QMOM, down 17.2%. During the sale on Monday, the Alpha Architect US quantitative momentum fund lost 3.86%.
Of the most widely held growth stock ETFs, the $311 billion Invesco QQQ Trust QQQ lost 5.6%, while the $149 billion Vanguard Growth ETF fell 7.4%. On Monday, QQQ lost 3.88% and pioneering growth slid 2.23%.
Overall stock market measured in Morning Star US Market Index This has been a 5.8% decrease since December 6th. Value stocks avoid most recessions. Morning Star US Value Index It's only down 0.5% over the same period.
The sale of growth inventory is a major break from the recent era when these names produced Gangbuster returns. Even considering the recession, only 15 of the last 100 growth ETFs have declined over the last year's subsequent period, with growth indexes far superior in 2023 and 2024.
Small and medium ETFs are the worst hits
Growth ETFs have been down completely, but the worst performance of the 10 people since the US growth index peaked is small and mid-term names.
The group's worst business, Alpha Architect Fund focuses on momentum stocks (the ones that rose the most over a given period). The second performer was the $257 million Invesco Wilderhill Clean Energy ETF PBW. Clean Energy Stocks have been hit hard since the November 2024 election, with President Donald Trump pledging an end policy to support clean energy (except nuclear) in favour of investment in fossil fuels.
Of the biggest growth ETFs, the $37 billion Vanguard small-cap ETF was at its worst, falling 13% over that period. This pioneering product is the growth of the group's only small-caps. Meanwhile, the $311 billion Invesco QQQ Trust QQQ and the $41 billion Invesco Nasdaq-100 ETF QQQM, which tracks the NASDAQ-100, have fallen 5.6% since growth stocks peaked in December.
