We compare VUG vs VOOG:
Vanguard Growth ETF (VUG) and Vanguard S&P 500 Growth ETF (VOOG) are both among the best growth Exchange Traded Funds (ETFs).
These two Exchange Traded Funds (ETFs) are very popular.
This article will help you decide between VUG vs VOOG.
VUG vs VOOG
The main difference between VUG and VOOG is their expense ratio. VUG has an expense ratio of 0.04%, while VOOG has an expense ratio of 0.1%. This means VOOG is more than twice as expensive compared to VUG.
That can make a significant difference over the long term.
VUG has an expense ratio of 0.04%
VOOG has an expense ratio of 0.1%
Another difference is the index these ETFs track. For example, VUG tracks the CRSP US Large-Cap Growth Index, while VOOG tracks the Standard & Poor's 500 Growth Index.
- Tracks the CRSP US Large Cap Growth Index
- Expense Ratio: 0.04%
- Holds 287 Stocks
- Dividend Yield 0.4%
- Equivalent Admiral Fund (VIGAX)
- Tracks the S&P Growth Index
- Expense Ratio: 0.1%
- Holds 242 Stocks
- Dividend Yield 0.52%
- Similar to (VUG)
VUG vs VOOG Performance
VUG and VOOG have performed similarly over the last 10 years, with VOOG beating VUG by only 0.21% annually.
However, that does not guarantee the next 10 years will look the same.
Here is a side-by-side comparison of their performance:
Here is VUG vs VOOG performance on a chart:
As you can see, VUG and VOOG performance have overlapped over the last 10 years, with a difference of only 0.21% annually.
Similarities between VUG and VOOG:
- Vanguard Exchange-Traded Funds (ETFs)
- Number Of Holdings (280 vs 242)
- Similar Performance
- Focus On Growth Companies
VUG and VOOG Differences
The primary difference between VUG and VOOG is their expense ratio. VUG has an expense ratio of 0.04%, while VOOG has an expense ratio of 0.1%. This makes VOOG more than twice as expensive compared to VUG.
Another difference between VUG and VOOG is the index they track. VUG tracks the CRSP US Large-Cap Growth Index, while VOOG tracks the Standard & Poor's 500 Growth Index.
This hasn't made a difference in their performance. They are both focused on US growth stocks.
VOOG also has fewer holdings compared to VUG (242 vs 287). This gives VUG more diversification within the growth sector and likely less volatility.
Both are passively managed Vanguard ETFs with relatively low expense ratios (0.1% vs 0.04%).
You keep more of your returns by investing in ETFs with low expense ratios. This can make a big difference over time.
Differences between VOOG and VUG:
- Expense Ratio (0.1% vs 0.04%)
- Number Of Holdings (242 vs 287)
- Index The Fund Tracks
- Level Of Diversification
- Level Of Volatility
VUG vs VOOG Holdings
Vanguard's VOOG has fewer holdings than VUG (242 vs 287). However, VUG and VOOG have almost the same top 10 holdings.
VOOG's top 10 holdings comprise 54% of its total holdings compared to 50% with VUG.
This makes VOOG more technology-heavy, with the technology sector making up 54% of the assets. As a result, VOOG's performance will also have more volatility depending on the performance of these top 10 holdings.
Here are VUG and VOOG's top 10 holdings side by side:
VUG and VOOG are largely made up of Apple, Microsoft, Amazon, Google, and Tesla.
VUG and VOOG Holdings Overlap
There is an overlap between VUG and VOOG that includes 155 stocks. Roughly 58% of VUG's holdings are included in VOOG, and 51% of VOOG's holdings are in VUG.
Here are VUG and VOOG holdings overlap:
There is an overlap by weight of about 74%:
This gives VUG slightly more diversification compared to VOOG.
- Fund Inception: 2004
- Expense Ratio: 0.04%
- Number Of Stocks: 287
- Top 10 Holdings: 50%
- Equivalent Admiral Fund (VIGAX)
Vanguard Growth ETF (VUG) is an ETF focused on growth companies. The price-to-earning (P/E) ratio for VUG is 38.8x which is high.
The fund has $169 billion in total net assets.
Vanguards Growth ETF (VUG) has outperformed the S&P 500 and, therefore, Vanguard 500 Index Fund ETF (VOO) over the last 10 years:
VUG (Blue) S&P 500 (Yellow)
However, remember that this does not guarantee that the next 10 years will look the same.
Vanguard's VUG comprises Apple, Microsoft, Google, Amazon, and Tesla and provides exposure to over 250 stocks.
The top 10 holdings make up 50% of the portfolio.
This makes VUG less diversified than other ETFs, such as Vanguard Total Stock Market Index Fund ETF (VTI).
- Fund Inception: 2010
- Expense Ratio: 0.10%
- Number Of Stocks: 242
- Top 10 Holdings: 54%
- Similar to VUG
Vanguard S&P 500 Growth ETF (VOOG) is focused on growth companies. As a result, the price-to-earnings (P/E) ratio for VOOG is 34.3x which is high.
That is expected with a growth index. The fund has $169 billion in total net assets.
VOOG was created in 2010 and has an expense ratio of 0.10%. This is twice as expensive as VUG, which has an expense ratio of 0.04%.
Here is what a 0.06% fee (difference between VOOG and VUG) will cost over 30 years.
Assuming you start with an initial investment of $100,000 and contribute $10,000 yearly over 30 years. You will have roughly ~$50,000 less in your account.
This does not include costs to buy and sell your shares.
Vanguard's VOOG has outperformed the S&P 500 over the last 10 years:
VOOG (Blue) S&P 500 (Yellow)
Vanguard VOOG's top 10 holdings include Apple, Microsoft, Alphabet, Amazon, and Tesla. The ETF also provides exposure to over 200 stocks.
The top 10 holdings make up over 50% of the portfolio. This isn't very diversified compared to other ETFs such as Vanguard Total Stock Market Index Fund ETF (VTI).
You can expect more volatility with VOOG since its top 10 holdings comprise a large number of its holdings (over 50%).
A few stocks can cause VOOG's price to change dramatically.
No Minimum Investment
VOOG and VUG are exchange-traded funds (ETFs), so there is no minimum investment. Investors looking to buy fractional shares can use platforms like M1 Finance.
Typically, fractional shares are not available for ETFs, but with M1 Finance, you can purchase fractional shares with no commission.
Buying fractional shares allows you to maximize your investment. This is great for shares of VOOG or VUG due to their high prices per share.
There are two easy ways to invest in VOOG or VUG commission-free:
Both of these options are free. This is important because fees can lower our returns.
M1 Finance is the best option because it lets you purchase VUG, VOOG, and thousands of other stocks.
I also use Personal Capital to track my investment fees. They have a free Retirement Fee Analyzer that tells you the future impact of fees on your portfolio.
Personal Capital's free tools allow you to easily find which of your investments has high fees so that you can switch them to low-cost options. (Get a $20 Amazon Gift Card with this link when you add at least one investment account containing a balance of more than $1,000 within 30 days)
Which Is Better VUG or VOOG?
VUG and VOOG are similar investments. However, VUG is better because it has a significantly lower expense ratio of 0.04%. In addition, they both offer investors the ability to invest in the US growth market.
VUG offers similar returns with less volatility and lower costs than VOOG.
Considering VUG instead of VOOG is something even Vanguard recommends:
The expense ratio difference between these two ETFs significantly affects total returns. Especially when you consider you are essentially getting the same market exposure.
You can further keep costs down by buying and selling shares commission-free.
Again a great way to do this is with M1 Finance.
You can purchase fractional shares for free, allowing you to buy VOOG, VUG, and thousands of other stocks/ETFs.
Is VUG or VOOG Better for Financial Independence?
VUG and VOOG can help you reach Financial Independence and Retire Early (FIRE). They both have similar returns on investment. They also have performed great over the last 10 years.
I prefer VUG because I'm a big fan of keeping fees to a minimum. It doesn't get much better than VUG, with a tiny expense ratio of 0.04%.
I would also suggest looking into other funds that give you more diversification, like VTSAX.
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My Winner: VUG
My winner is VUG solely based on the increased diversification and lower expense ratio.
Both ETFs have low expense ratios and have performed well over the last decade.
There is also no guarantee that the next 10 years will look the same, but with their low cost, I believe VOOG and VUG can make a great addition to an investor's portfolio.
You would likely want to consider other index funds with more diversification into different sectors or countries as a core holding.