Picking individual growth stocks can be risky due to the future being inherently uncertain. These companies may also be riskier due to their more speculative natures and aggressive trajectories. Investing in high-yield ETFs instead can be seen as a helpful alternative.
Here are the best high-yield ETFs to buy.
VanEck Semiconductor ETF (SMH)
The VanEck Semiconductor ETF (NASDAQ:SMH) has an international focus, including companies like Taiwan Semiconductor Manufacturing (NYSE:TSM) and ASML (NASDAQ:ASML), along with popular domestic companies like Nvidia (NASDAQ:NVDA) and Broadcom (NASDAQ:AVGO).
The SMH ETF has returned 37% year-to-date and has an expense ratio of 0.35%.
Concentrated in key players like Nvidia (20%) and Taiwan Semiconductor (10%), SMH benefits from robust semiconductor demand driven by trends like work-from-home, virtual entertainment, and electric vehicles. Technical analysis shows substantial institutional investment and supportive momentum indicators over the long run.
ARK Next Generation Internet ETF (ARKW)
The ARK Next Generation Internet ETF (NYSEARCA:ARKW) is focused on software-related technology opportunities. ARKW looks at the future of the digital economy in an internet age, with holdings that include companies like Coinbase (NASDAQ:COIN) and Roku (NASDAQ:ROKU).
The ETF has returned 34% to investors year-to-date. It has an expense ratio of 0.88%.
ARKW ETF is a strong buy, focusing on next-gen internet technologies such as cloud computing and AI. Its portfolio includes significant allocations in Coinbase, Grayscale Bitcoin Trust (OTCMKTS:GBTC), and Tesla (NASDAQ:TSLA), constituting 63% of assets in the top 10 holdings. The fund primarily invests in Information Technology (36%) and Financials (21%), ensuring diversified exposure to growth-oriented sectors, promising long-term capital appreciation despite short-term volatility.
The fund’s exposure to high-growth investments increases the likelihood of ARKW rising in a strong economy. Many of the firm’s ETFs have recovered after underperforming in 2022. It’s easy to forget the types of returns Ark Invest has generated in the past. Investors have an opportunity to enter ARKW at a more enticing price point compared to a few years ago.
Vanguard Mega Cap Growth ETF (MGK)
The Vanguard Mega Cap Growth ETF (NYSEARCA:MGK) invests in the ‘Magnificent 7’, stocks that have delivered the most gains to the S&P 500 this year. The Magnificent 7 includes marquee names like Apple (NASDAQ:AAPL), Tesla, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Meta Platforms (NASDAQ:META) and other FAANG stocks.
The YTD return of MGK is 30% based on market price and 28.37% based on NAV (Net Asset Value). The expense ratio of MGK is quite low at 0.07%.
MGK exposes investors to large growth companies in the U.S. market. The ETF focuses on sectors like Technology, Consumer Discretionary, and Health Care, among others. It has a diversified portfolio, holding stocks of companies with various market capitalizations, primarily focusing on large-cap growth stocks.
MGK is a buy due to its significant outperformance against the S&P 500, driven by holdings in leading technology companies. The ETF is particularly suited for long-term investors seeking exposure to companies excelling in AI and technology. MGK is an attractive ETF for investors who want more exposure to big tech companies.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.