One of the few appealing combinations in the investment world includes stability offered by large-cap companies combined with growth attributes like solid revenue and high projected growth. That is where large-cap growth ETFs come into play, suitable for investors who can tolerate short-term market uncertainty, have a long-term investment horizon, and adopt a buy-and-hold approach.
Therefore, top-performing large-cap growth ETFs iShares Russell Top 200 Growth ETF (IWY – Get Rating) and Invesco QQQ Trust ETF (QQQ – Get Rating) could be ideal investments this year for stable long-term returns.
The economy added 216,000 jobs in December, and the unemployment rate was unchanged at 3.7%, a historically low figure, the U.S. Bureau of Labor Statistics reported. Hiring last month far topped economist expectations and accelerated from the prior month, rebuking concerns of a recession in the upcoming months and signaling a resilient economy.
While the monthly inflation rate indicated an increase from the flat CPI reading in October, the annual rate showed another decline after hitting 3.2% a month ago. Inflation is well below last summer’s peak of 9.1%; however, it remains more than a percentage point above the Fed’s target of 2%.
Policymakers also watch closely the pace of wage growth since a surge in worker pay could prompt businesses to balance out the added costs by increasing prices. Wages grew 4.1% last month compared to a year earlier, defying the downward pressure imposed by the Fed.
The robust jobs data could potentially delay the Fed’s recently announced plans to cut interest rates this year. The central bank, in its recent December meeting, held key interest rates steady for the third consecutive time, staying in a targeting range of 5.25%-5.5%, and set the table for three rate cuts in 2024.
Fed officials “reaffirmed that it would be appropriate for policy to remain at a restrictive stance for some time until inflation was clearly moving down sustainably toward the [Federal Open Market] Committee’s objective,” according to minutes of their meeting in December.
Amid this backdrop, you could consider investing in large-cap ETFs. Most of these ETFs tend to invest in large-cap companies —those with market caps larger than $10 billion and up to more than $1 trillion—usually with established brands and strong balance sheets.
Most large-cap growth portfolios focus on companies in rapidly expanding industries. These funds offer a higher potential of returns over the long term. Surely, stocks it tracks tend to fluctuate, but large-caps are less volatile compared to their small-cap or medium-cap cousins, making them a better choice for risk-averse investors.
Now, let’s look at the fundamentals of the two…
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