Daily Stock Pick: November 1st, 2022

Many may be calling a bottom here; others are more skeptical. There’s no denying that, over the long run, the market has a history of rebounding and moving higher. That’s especially true for stocks that have significant growth potential. However,  factors like regulatory concerns, geopolitical and supply chain issues and possible shifts in tax laws threaten to take the wind out of the sails of any individual stock without much warning.

Along with the potential for supercharged returns from large-cap growth comes the potential for volatility. Investing in a fund fixed on growth can help diversify your portfolio while reducing your risk. Choosing the right basket of growth stocks can help maximize your earnings while tapping into a wide array of companies from industries with high growth potential, like information technology and financial services. Today we’ll highlight a top-rated large-cap growth investment for our readers who want to reap the benefits of stocks with high growth potential while cutting back on exposure to the risk involved with individual stocks. 

The Schwab US Large-Cap Growth ETF (SCHG) is a low-cost option for those looking to diversify into growth through a basket of large-cap equities. The fund tracks the Dow Jones U.S. Large-Cap Growth Total Stock Market index.  

Unlike the technology-focused The Invesco QQQ Trust (QQQ), SCHG offers exposure to companies from many growth-oriented sectors. There is, of course, a sector bias toward tech, which makes up about 41% of the portfolio spread among consumer discretionary, communication services, health care, and other sectors. Of the remaining 59%, industrials, health care, energy, and consumer goods receive equal weighting.  

The fund selects its growth stocks from 750 of the largest companies (by market cap) based on fundamental factors, including projected earnings growth as well as trailing revenue and earnings growth. Since it draws from a larger selection universe, SCHG has a significant mid-cap tilt. The index rebalances quarterly and undergoes an annual reconstitution in September.  

Any actively-managed product is ultimately a wager on the portfolio managers who pick the stocks. With a long history of outperforming peers, Cathie Wood, ARK Invest’s founder and chief investment officer, is the curator of ARK’s investment philosophy and the ultimate authority in the firm’s investment decisions.  

The Schwab US Large-Cap Growth ETF (SCHG)

  • Net Assets   14.48B
  • Price / Earnings Ratio   31.96
  • Price / Book Ratio  7.68
  • YTD Daily Total Return  -30.55%
  • Yield  0.56%
  • Expense Ratio  0.04%
  • Number of Holdings  41
  • Top Holdings      Apple (AAPL), Microsoft (MSFT), Amazon (AMZN)