Growth ETFs add portfolio diversification

Article Excerpt

Most successful investors hold a mix of stocks (or ETFs that hold them) in their portfolios. Indeed, one key component of a well-diversified portfolio is growth stocks. Note, however, that it’s very easy to confuse growth stocks with momentum stocks. Like growth stocks, momentum stocks often move up faster than the market averages. But momentum stocks attract a different kind of investor. Momentum investors aim to profit from short-term trades, while growth-stock investors are in for the long haul. Here’s a look at three ETFs that focus on growth stocks. (See the Supplement on page 90 for more on growth stocks vs. value stocks.) SPDR S&P 400 MID-CAP GROWTH ETF $83.55 (New York symbol MDYG; TSINetwork ETF Rating: Aggressive; Market cap: $2.7 billion) tracks the S&P MidCap 400 Growth Index. The index consists of stocks with the strongest growth characteristics based on sales and earnings growth and share price growth. Stocks are weighted based on their market capitalizations. Industrial companies make up 29% of the…