When building a long-term portfolio, many investors look at growth and value exchange-traded funds (ETFs) . Each follows a different approach to investing.
Growth ETFs focus on companies expected to expand faster than the broader market. Value ETFs include companies considered to be trading below their actual worth. Many investors choose to include both in their portfolio. They’re not the same, but growth and value ETFs can play a role in building wealth, depending on goals, timelines and preferences.
In this article, we’ll break down what growth and value ETFs are, why they matter to some investors, and how people balance them. We’ll also explore a few examples that show how different strategies can take shape over time.
What are growth ETFs?
Growth ETFs are funds that invest in companies expected to grow earnings or revenue faster than the market average.
These companies often reinvest profits into the business instead of paying large dividends to shareholders. That means they may offer lower income returns. You’ll often find technology, healthcare or consumer-focused companies in growth ETFs – these sectors tend to lead innovation or expansion.
Growth ETFs may also experience bigger price swings. That’s because future growth expectations can change quickly, especially when market conditions shift. Some investors include growth ETFs to target long-term capital growth . But with higher return potential often comes higher risk.
Keep in mind that not all growth companies will outperform, and past growth doesn’t guarantee future results.
What are value ETFs?
Value ETFs are funds that invest in companies considered to be trading for less than what they’re worth based on fundamentals. These companies are often well established, with low price-to-earnings or price-to-book ratios, and a track record of paying dividends to shareholders.
Value ETFs may not grow as quickly during strong market runs. But they’re often seen as a safer bet, with investors banking on the fact that the market will come to recognise the assets' actual value. That’s why they tend to appeal to value investors looking for income and resilience rather than fast-paced growth.
That said, companies labelled as "value" can still underperform, and there’s no guarantee of lower risk or more reliable returns.
Why do long-term investors seek to balance both?
Growth and value ETFs can behave differently in changing market conditions. It’s the reason some investors include both to help spread risk and opportunity.
Here’s how balancing the two can support different goals:
- Performance across market cycles : Growth ETFs may do well during strong economic periods. Value ETFs often hold up better when markets slow down. Holding both can offer exposure to different phases of the market cycle .
- Smoother returns : Mixing styles may help reduce sharp movements in your portfolio as value stocks can help offset market dips in growth stocks and vice versa.
- Diversified sources of return : Growth and value can rely on different factors. Growth depends on future earnings, while value focuses on current business strength and fundamentals. Both can reward investors in different ways.
- Personal comfort with ups and downs : Some investors balance growth and value to stay more comfortable during market swings. It can help reduce emotional investing and resist the urge to react suddenly.
- Flexibility over time : A blended approach may allow room to adjust. As goals or timeframes shift, the balance between the investments can change too.
There’s no fixed formula here. But understanding how growth and value interact may help you shape a strategy that reflects your preferences.
Do investors need to balance them?
There’s no rule that says growth and value must be balanced. Some investors lean heavily in one direction and stick with it, while others adjust over time. It depends on the person. To figure out whether balancing makes sense, it can help to ask a few simple questions:
- What’s your timeframe? If you’re investing for decades, you might prioritise long-term potential. Shorter investing horizons can make stability more important.
- How do you handle risk? As mentioned, growth ETFs can rise and fall quickly. Value ETFs are usually steadier but may lag in strong markets.
- Are you aiming for capital growth, income, or both? Value ETFs often offer more income via dividends, while growth ETFs focus on increasing value over time.
- Do you plan to adjust your strategy? Some investors rebalance regularly. Others build a set-and-forget portfolio. Either way, the mix you choose can reflect that approach.
- Do you know which ETFs you already hold? Some funds tilt towards growth or value even if they’re not labelled that way. It helps to check before adding more.
- Are you comparing ETFs on more than just past performance? It’s easy to focus on returns. But fees, diversification and how a fund is structured also shape outcomes.
As we’ve said, growth and value can serve different roles in an investment portfolio. You don’t need both, but knowing how they work together can give you more flexibility.
What would a growth/value balance look like?
There’s no one right way to balance growth and value ETFs. And honestly, what feels right for you might look completely different to someone else. That’s okay.
If you’re weighing up the mix, it can help to start with what you want from your portfolio. Are you more focused on long-term growth? Keen to keep things steady? Hoping for some income along the way? Your answers can help shape your balance.
Some people aim for a 50/50 split to take advantage of both the capital growth and income benefits . Others lean more heavily towards growth or value, depending on their comfort with risk and their time frame. It doesn’t need to be perfect. What matters is that it feels aligned with where you’re at.
And things change. Life, markets, priorities – they all shift. That’s why some investors gradually adjust their balance over time. You might start with a growth focus, then slowly lean more into value as your goals come into view.
Of course, not everyone takes that path. Some investors stick with a set allocation for years and ride the ups and downs. That can work too, depending on your approach and how you like to manage your investments.
There’s room to explore here. Finding your balance doesn’t mean ticking a box – it means building something that fits you .
How investors balance growth and value differently
Everyone’s investing style is different. The way one person balances growth and value ETFs won’t suit everyone else, and that’s completely fine.
These fictional case studies show how investors might approach the two ETF types based on their goals, risk tolerance and time frame. They’re not recommendations, but examples to help you explore what might make sense for you.
Case study 1: the conservative investor
Lina is in her mid-50s and wants steady returns with fewer surprises. She prefers holding companies that pay dividends and focus on business fundamentals, like a low price-to-earnings ratio.
Her portfolio leans 70% towards value ETFs. These offer regular passive income and tend to hold up better when markets dip. She keeps the remaining 30% in growth ETFs to stay exposed to companies that could drive long-term gains.
Case study 2: the risk-tolerant investor
Marek is in his early 30s and doesn’t mind market fluctuations. He focuses on long-term growth and is comfortable with short-term drops.
His portfolio is 80% growth ETFs and 20% value ETFs. The growth portion aims for higher returns, even if it’s more volatile. The value slice adds some balance and could potentially help soften the impact of market drops.
Case study 3: the long-term investor
Amira has a 30-year investment horizon. She treats her portfolio like a long-term savings plan. Right now, her portfolio is 75% growth ETFs and 25% value ETFs.
She’s aiming to grow her wealth early while she has time to ride out market swings. She plans to slowly shift towards a more even split (or even lean into more conservative assets) closer to retirement .
These examples reflect different ways people might think about their mix. They’re not fixed templates, but they can help frame your own thinking.
Find a balance that fits
There’s no universal rule for how to balance growth and value ETFs. As we’ve said, different investors take different approaches, and that’s completely valid.
What matters most is understanding what each ETF type brings to the table. That way, you can decide how they might work together in your portfolio. Your mix can reflect your objectives, investing horizon and risk tolerance.
It’s also okay if your approach changes. Life doesn’t stand still – and neither does your investing strategy. Whether you’re just starting out or refining an existing plan, clarity comes from understanding your options and staying open to learning.
Take your time. Ask questions. And if you're not sure where to start, knowing what you're trying to achieve is a good first step.
All figures and data in this article were accurate at the time it was published. That said, financial markets, economic conditions and government policies can change quickly, so it's a good idea to double-check the latest info before making any decisions.
