This year has been a tale of two markets for growth stocks. Large-cap growth companies with exposure to either artificial intelligence (AI) or weight-loss products have posted enormous returns for shareholders in 2023. Small- to mid-cap growth stocks, on the other hand, have softened in the face of rising interest rates and stubborn levels of inflation. 

This marked divergence is evident in the performance gap between the Vanguard Growth ETF, which holds mostly large to megacap giants like Apple, Tesla, and Eli Lilly, and the Vanguard Small-Cap Value ETF, which invests mainly in smaller businesses like Bunge Limited and IDEX Corporation. The Vanguard Growth ETF has benefited from key themes like AI and obesity care this year, while the Vanguard Small-Cap ETF has lost ground in 2023 due to tighter credit conditions and a growing aversion to risk by investors. 

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Source Fool.com