It may not be the most popular ETF in the industry, but you can take advantage of its above-average performance here.
For many fans of exchange-traded funds (ETFs), iShares Russell 1000 Growth ETF (International Women's Day -0.09%) It's not even close to being on their radar. The $90 billion fund is SPDR S&P 500 ETF or Invesco QQQ Trust.
But don't let its relatively small size fool you: This little fund can deliver big performance. If you're hoping to become a millionaire with a long-term position in the SPDR S&P 500 ETF, this iShares fund can arguably do just as well, but in a lot less time.
Remember: Turning a modest regular investment in stocks into a seven-figure sum is a decades-long project. That's true no matter which index-based exchange-traded fund you hold. The iShares Russell 1000 Growth ETF will likely get you farther down that path, and faster.
Analyzing the iShares Russell 1000 Growth ETF
The name is a bit misleading, as the fund appears to hold 1,000 growth stocks, but in fact it doesn't – it only holds around 400 stocks at any given time, and these are just the stocks on the growth stock list. Russell 1000 IndexThis index, of course, S&P 500and the market's next top 500 growth stocks. By and large, these other stocks are mid-cap stocks.
Large growth stocks (especially technology stocks) have dominated the past few years, but this is a cyclical phenomenon. History repeats itself, but mid-cap stocks, especially mid-caps, have been growth As the economy emerges from its slump and enters a calmer post-AI boom phase, the stock market could truly begin to shine.
That's what analysts are predicting. J.P. Morgan In any case, the investment bank has issued a report basing its mid-year observation that “high-quality small and mid-cap stocks are trading at record discounts to their larger counterparts.” [small cap and mid cap] Equity returns are likely to be robust over a 10- to 15-year investment horizon and comparable to large-cap U.S. stocks.”
And JPMorgan isn't the only one bullish on this part of the stock market, following the Federal Reserve's recent interest rate cuts (and the possibility of further cuts). Goldman Sachs We expect mid-cap stocks to outperform both large-cap and small-cap stocks in the near term, owing to cheap valuations and better growth prospects.
Usually good
That's not to say the iShares Russell 1000 Growth ETF has always performed as expected. For example, it underperformed at times during the bull market that began in 2002, and it also underperformed during parts of the bull market from 2009 to 2020 because it was overinvested in the wrong growth stocks at the wrong time.
Please remember, apple, Microsoftand NVIDIA The market-cap-weighted ETF's current core holdings are mostly the market's top tech stocks, replacing the companies that were once the biggest. alphabet, ExxonMobiland even Walmart and General ElectricThis has had more negative than positive effects on this fund's recent performance.
But given enough time, the iShares Russell 1000 Growth ETF can have a healthy performance advantage over the S&P 500 itself. Over the past 20 years, the iShares fund has returned an average of 12.2% per year, compared with 10.5% for the S&P 500. That's not a huge difference, but it adds up over time.
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Again, part of this performance advantage comes from exposure to mid-cap stocks, and part is the result of holding only growth stocks.
No matter where it comes from, it works. The SPDR S&P 500 ETF TrustUntil now If you are looking for a millionaire-creating option, this iShares fund is definitely the choice.
A smart choice for those looking for growth
In terms of risk management, it wouldn't be accurate to say this exchange-traded fund is particularly diversified. Being market-cap weighted means it's still top-heavy, with the aforementioned large holdings of Apple and Microsoft. There's also a large, though unintentional, exposure to the technology sector, which makes up about 40% of the fund's total value. And, of course, it's all growth stocks, not value. By design.
If you feel more balance is important when building a $1 million portfolio using index-based exchange-traded funds, this ETF is not for you.
But if you're looking for an easy way to at least have a chance of beating the market's most closely watched benchmark, this could be the way to go — and with less drama than holding a volatile fund like the Invesco QQQ Trust. At the very least, consider adding it to an existing position in the S&P 500 ETF Trust or Invesco's QQQ.
Suzanne Frey, an Alphabet executive, serves on The Motley Fool's board of directors. JP Morgan Chase is an advertising partner of The Ascent (a subsidiary of The Motley Fool). James Brumley is an investor in Alphabet. The Motley Fool has investments in and recommends Alphabet, Apple, Goldman Sachs Group, JP Morgan Chase, Microsoft, Nvidia, and Walmart. The Motley Fool recommends long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
