A scorching hot ETF that’s worth the growth shock

Passive Canadian investors looking for a US growth jolt without having to pick individual names may want to consider broadening their horizons beyond the TSX-traded ETFs that offer exposure south of the border. In an earlier piece, I highlighted that it’s still worth buying US-traded ETFs as well.

If it’s not the lower expense ratios (the fees you pay to the fund’s managers), then it’s the unique mix of stocks that may not compare well to the TSX Index. In this piece, we’ll take a closer look at some US-traded ETFs that I think are worth picking up while the Canadian dollar is still relatively hot.

With the US Federal Reserve mixed on what comes next (rate hike or cut?), I think the fool is in for a bit of a pullback. Whether this is an opportunity to make the leap from Canadian dollars to greenbacks remains the big question. Either way, I think there’s a lot of impressive growth to be had by diversifying into some US ETFs that are still quite popular among Canadians.

In this piece, we’ll look at three intriguing growth-oriented ETFs for Canadians looking for exposure to the US tech sector as it experiences a bit of AI disruption and fears of high spending grow. You have to spend money (in AI) to make money, right? In any case, let’s take a look at a higher growth ETF that’s worth getting on the US exchanges, preferably to give your RRSP a nice growth bump.

Vanguard Mega Cap Growth Index Fund

I was quite surprised when I saw the Vanguard Mega Cap Growth Index Fund (NYSEMKT:MGK) is among the most popular U.S. ETFs owned by Canadian investors. Considering the low expense ratio (just 0.05%), the massive dose of mega-caps, and the lack of TSX-traded comparables, perhaps it shouldn’t be too much of a shock to imagine Canadian investors buying up MGK. Keep in mind that your RRSP is essentially a “shield” against the pesky 15% U.S. withholding tax on dividends paid out.

After all, mega-cap growth is where the returns have been in recent years. More recently, MGK fell 9% from its all-time high as investors showed more love for small caps.

Could small cap value be the new theme? Or is the dip in high growth a buying opportunity? I think it’s the latter. If you like mega-caps (particularly mega-cap tech) and want to take advantage of the relative pullback among the slowing giants, I’d say the MGK is a great pick here. Despite the recent skid, the long-term momentum is still largely intact. The ETF is still up 84% in five years. And if I were to guess, I’d label this latest correction as a dip that shouldn’t panic long-term thinkers.

While others “rotate” after the fact, it may be time to stick with the proven performers for the long-term game. Ultimately, AI is a field that requires enormous investments. And the smaller players may not have the wallets to stay ahead. Either way, I think MGK is a great US ETF to add to your watchlist if you’re looking for value that’s obvious or opportunity that’s hiding in plain sight.