The Best Growth Funds

Over the past 12 months, the Morningstar US Growth Index boasted a return of 21.49% versus 14.56% for the Morningstar US Value Index. Given the sizable performance gap between the two styles, many (including Morningstar’s chief US market strategist David Sekera) argue that value stocks look like a better opportunity today than growth stocks. “While the growth category is fully valued, according to our valuations, we think investors should maintain exposure to growth stocks,” says Sekera. “Morningstar’s equity analyst team thinks we are still in the early innings of the growth and development of artificial intelligence. The growth category is most exposed to this long-term secular trend.”

Should Investors Buy Growth Stock Mutual Funds and ETFs Today?

Investors who own core stock mutual funds or exchange-traded funds—especially those tracking a broad market index such as the S&P 500 or Wilshire 5000 Index—already have exposure to growth stocks. They’re diversified. They likely don’t need to add more growth stocks to their portfolios, as they already have plenty.

However, some investors may think growth stocks are the place to be, and they’d like to tilt their portfolios toward that style. For such investors, there are many fine growth-stock mutual funds and ETFs to choose from. Here, we’re shining a spotlight on those that land in the US large-growth, mid-growth, or small-growth Morningstar Categories and have at least one share class that earns a top Morningstar Medalist Rating of Gold with 100% analyst coverage. We expect such highly rated funds to outperform over a full market cycle.

Best Growth Mutual Funds and ETFs

These ETFs and mutual funds focus on growth stocks and have at least one Gold-rated share class in June 2024.

1. Brown Capital Management Small Company BCSIX
2. Champlain Mid Cap CIPMX
3. Champlain Small Company CIPSX
4. Fidelity Growth Company FDGRX
5. Loomis Sayles Growth LSGRX
6. Morgan Stanley Institutional Discovery MPEGX
7. Morgan Stanley Institutional Growth MSEQX
8. Nationwide Small Company Growth NWSAX
9. Primecap Odyssey Aggressive Growth POAGX
10. Primecap Odyssey Growth POGRX
11. Principal Blue Chip PGBHX
12. Principal MidCap PMBPX
13. T. Rowe Price All-Cap Opportunities PRWAX
14. T. Rowe Price Institutional Mid-Cap Equity Growth PMEGX
15. T. Rowe Price Mid-Cap Growth RPMGX
16. Vanguard Capital Opportunity VHCOX
17. Vanguard Growth Index/ETF VIGAX VUG
18. Vanguard Russell 1000 Growth Index/ETF VRGWX VONG
19. Vanguard S&P 500 Growth Index/ETF VSPGX VOOG
20. Vanguard S&P Mid-Cap 400 Growth VMFGX
21. Vanguard Small Cap Growth Index/ETF VSGAX VBK
22. Wasatch Core Growth WGROX
23. Wasatch Small Cap Growth WAAEX

What Is Growth Stock Investing?

Growth stock investors favor companies that exhibit growth characteristics and typically care little about the price they pay for a company’s stock.

However, there are many different ways that an investor can measure a company’s growth. For instance:

• Many growth stock investors focus on earnings growth and own stocks with high valuations. These investors demand that a company’s earnings growth exceed that of the market.
• Some investors practice a momentum strategy, focusing on companies with accelerating earnings whose stock prices are already on the upswing, the idea being that stocks that have outperformed will continue to do so, at least in the short run.
• Other growth stock investors buy stocks in companies without any earnings; they’re focused instead on revenue growth, with the hope that earnings will eventually follow.
• Other growth stock investors focus on stocks with more moderate, but steady, earnings growth.

How Do Growth Stock Mutual Funds and ETFs Work?

Growth stock mutual funds and ETFs typically pursue one of the strategies outlined above.

But when it comes to growth stock mutual funds and ETFs, there are additional nuances to consider. For example, a few funds on the list, such as Loomis Sayles Growth, have compact portfolios consisting of 50 or so securities, while many of the index funds and ETFs on the list own hundreds of stocks. Some growth funds focus on stocks from large companies, while others focus on stocks of midsize or smaller firms.

(As an aside, mutual funds sometimes stop accepting new money so that they can continue to effectively invest within their wheelhouses; check the fund’s Status field on its Morningstar.com quote page to find out whether a fund you’re interested in is open to new investment.)

The bottom line: Do your research before you buy. Our investment categories and Morningstar Medalist Ratings are just a starting point. Be sure to consult our analyst reports to learn more about a particular fund’s strategy.

How to Find Growth Stock Funds for the Long Term

Given their high Morningstar Medalist Ratings, we expect the top-rated growth stock mutual funds and ETFs on our list to outperform over a full market cycle.

That being said, investors may want to expand their search for growth funds beyond this list, using parameters that matter to them. Here are two additional ways to find growth stock ETFs and mutual funds to investigate further.

• Some investors may prefer a list of top-rated funds that invest in growth stocks around the globe, not just in US names. Using the Morningstar Investor Screener, select Investment Type (either ETF or Mutual Fund), scroll down to Morningstar Category, and select Global Large Cap Growth (if you want funds that invest in both international and US large-cap growth stocks) or Foreign Large Cap Growth and Foreign Small/Mid Growth (if you want to exclude US growth stocks). Then choose Gold beneath Morningstar Medalist Rating.
• Want to find a complete list of growth stock ETFs or mutual funds available today, not just those with our highest Medalist Ratings? Using the Morningstar Investor Screener tool, select Investment Type (either ETF or Mutual Fund) and choose the Morningstar Category—Large Growth, Mid-Cap Growth, or Small Growth—that you prefer. Or choose all three.