You Think VUG Owns the Fastest-Growing Companies. That's Not Quite How It Works.
As always, look under the hood of your ETF so you know exactly what you're buying.
Overview
Investors buying shares of the Vanguard Growth ETF (NYSEMKT: VUG) probably think that they're buying the fastest-growing companies in the United States.
For the most part, that's true. The fund's selection criteria target companies using six separate growth-related metrics. The companies demonstrating the best composite of these factors make the final portfolio of growth stocks.
Details
But part of the fund's selection strategy might not be what investors think it is. Four of the six factors are concrete numbers directly from the company's financial statements:
Source
Originally published at www.fool.com.
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Disclaimer: This article is for informational purposes only and does not constitute investment advice. Data may be delayed up to 15 minutes. Past performance is not indicative of future results. Consult a licensed financial advisor before making investment decisions.