Exchange-traded funds focused on US growth stocks have nosedived in recent weeks, as investors have grown increasingly worried about the outlook for the economy amid the mounting trade war. On Monday, growth stocks were the hardest-hit segment of the Morningstar Style Box, with large growth falling roughly 4.4%, mid-cap growth down 3.5%, and small growth down 3.1%.
Out of the 99 diversified US stock exchange-traded funds with more than $100 million in assets tracked by Morningstar Direct, all are down since the Morningstar US Growth Index peaked on Dec. 6, 2024. Since that day, the index has fallen 15.3% through Monday’s close. The worst performer during this timeframe is the $293 million Alpha Architect US Quantitative Momentum Fund QMOM, which has declined 20.1%. On Monday, it lost 3.86%.
Among the most widely held growth stock ETFs, the $298 billion Invesco QQQ Trust QQQ has lost 9.2% and the $283 billion Vanguard Growth ETF VUG down 7.4%. On Monday, the Invesco fund lost 3.88%, while the Vanguard fund slid 2.23%.
The overall stock market as measured by the Morningstar US Market Index is down 8.4% since Dec. 6. Value stocks have avoided most of the downturn, with the Morningstar US Value Index down only 1.6% over the same period.
The selloff in growth stocks is a major break from their gangbuster returns in recent times. Even accounting for the downturn, only 20 of the 99 growth ETFs were down over the past one-year trailing period, with the Growth Index far outperforming value in 2023 and 2024.
Small- and Mid-Cap ETFs Hit Worst
While growth ETFs are down across the board, the 10 worst performers since the US Growth Index peaked are small- and mid-cap names.
The Alpha Architect fund, which performed the worst out of the group, focuses on momentum stocks (those that have risen the most over a particular period). The second-worst performer was the $245 million Invesco WilderHill Clean Energy ETF PBW. Clean energy stocks have been hit hard since the November 2024 election, with President Donald Trump promising to end policies supporting clean energy (except for nuclear) in favor of investment in fossil fuels.
Among the largest growth ETFs, the $37 billion Vanguard Small-Cap Growth ETF has fared the worst, dropping 15.8% over the period. This Vanguard offering is the sole small-cap growth ETF in the group. Meanwhile, the $298 billion Invesco QQQ Trust QQQ and the $39 billion Invesco Nasdaq-100 ETF QQQM, which both track the Nasdaq-100, are down 9.2% since growth stocks peaked in December.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
