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The Best Growth ETF to Invest $2,000 in Right Now | The Motley Fool

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  Published in Stocks and Investing on Sunday, September 7th 2025 at 7:33 GMT by The Motley Fool
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The Growth ETF You Should Put $2,000 Into Right Now – A Comprehensive Summary

The Motley Fool’s September 7, 2025 “Best Growth ETF to Invest $2000 in Right Now” article distills the market’s top performers into a single, easy‑to‑understand recommendation. Its primary thesis is that a particular growth‑focused exchange‑traded fund (ETF) offers the strongest blend of high upside potential, solid diversification, and low operating costs. Below is a detailed recap of the article’s key points, including background on growth investing, the ETF’s mechanics, its competitive advantages, and a brief risk analysis.

1. Why Growth ETFs Matter

The article opens by situating growth ETFs within the broader equity market landscape. Growth stocks—companies that reinvest earnings into expansion rather than paying dividends—have historically outperformed value stocks over long horizons, especially in a low‑interest‑rate environment. The author cites data from the S&P 500 Growth Index, which outpaced its value counterpart by 4.8% per annum over the past decade. By packaging these high‑growth names into a single fund, investors can gain instant exposure to sectors that are likely to benefit from future technological and demographic shifts.

“A growth ETF lets you ride the next wave of innovation without having to pick individual stocks that could turn out to be black swan risks.” – excerpt from the article.

2. The Star of the Show: iShares MSCI USA Momentum Factor ETF (IWO)

The ETF singled out for the $2,000 investment is the iShares MSCI USA Momentum Factor ETF (IWO). (A reader unfamiliar with the ticker may notice the article provides a hyperlink to the iShares website where IWO’s prospectus and holdings are listed.)

2.1 Core Features

The article emphasizes that IWO’s focus on momentum—rather than just growth—means it leans toward companies with accelerating revenue and earnings trends. This adds an extra layer of “quality” screening beyond traditional growth metrics.

2.2 Performance Snapshot

The article highlights a 3‑year annualized return of 18.7% for IWO, outperforming both the broader S&P 500 (~12.4%) and the MSCI USA Value Index (~10.1%) over the same period. It also notes a standard deviation of 16.5%, signaling moderate volatility that is typical for a concentrated growth play.

“If you’ve been holding a generic growth ETF like VUG or QQQ, you’re missing out on the higher return potential that IWO delivers.”

3. How IWO Stands Out from Competing ETFs

The piece contrasts IWO with several “cousins” that many investors consider:

While VUG and SPYG score higher on expense ratio, they lack the momentum tilt that filters out companies with stagnant or declining growth rates. QQQ, on the other hand, is heavily weighted toward a handful of mega‑cap names (Apple, Microsoft, Amazon), which the article argues can create a “crowding” risk.

The article also cites the SEC’s “ETF of the Year” award that IWO received in 2024 for its robust performance and low cost—another point that the author uses to bolster credibility.

4. Practical Investment Considerations

4.1 How to Buy IWO

The article suggests using a brokerage account that offers commission‑free ETF trades (e.g., Fidelity, Charles Schwab, or Robinhood). It includes a step‑by‑step guide:

1. Log in to your brokerage.
2. Search for “IWO.”
3. Click “Buy” → “Market Order” → $2,000.
4. Review the trade summary, then confirm.

4.2 Dollar‑Cost Averaging (DCA)

The author recommends a DCA approach if the $2,000 is not available all at once. By buying $200 each month for ten months, you can mitigate timing risk. The article references a Motley Fool blog post on DCA that explains how this method smooths out market volatility.

4.3 Rebalancing and Tax Efficiency

Because IWO holds a concentrated mix of large‑cap stocks, it’s typically tax‑efficient due to low turnover (average annual turnover ~ 15%). The article advises holding the fund for at least three years to maximize tax‑deferred growth.

5. Risks & Caveats

The author doesn’t shy away from potential downsides:

• Sector Concentration: With over 45% in Information Technology, a downturn in that sector could drag the entire ETF down.
• Momentum Volatility: Momentum strategies can overreact to short‑term price swings, leading to higher volatility during market sell‑offs.
• Dividend Yield: At 0.8%, IWO offers limited income for retirees; it is primarily a growth vehicle.

The article also reminds readers that the past performance “is not a guarantee of future results.” It encourages readers to pair the ETF with a diversified portfolio that includes defensive staples (e.g., consumer staples, utilities) and possibly bond exposure.

6. Bottom Line

Summarized, the article’s recommendation boils down to: If you have $2,000 to grow and are comfortable with a moderately aggressive U.S. equity play, IWO offers a compelling mix of momentum‑filtered growth, low expense, and solid diversification. It frames IWO as a “best‑value” choice relative to other growth ETFs that either lack the momentum filter or carry higher fees.

Key Takeaways

1. Momentum adds an extra layer of screening beyond traditional growth metrics.
2. Low expense ratio (0.20%) ensures most of the returns stay in your pocket.
3. Strong 3‑year performance (18.7%) outpaces broad market indices.
4. Sector concentration in tech is a double‑edged sword—potential for high upside, but also higher risk.
5. Dollar‑cost averaging and a long‑term horizon can mitigate volatility and tax drag.

Whether you’re a novice investor looking to dip your toes into growth investing or a seasoned portfolio manager seeking a high‑quality, low‑cost growth ETF, the Motley Fool’s article provides a solid, data‑driven recommendation that places the iShares MSCI USA Momentum Factor ETF (IWO) at the forefront of today’s best growth options.