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VOO vs VOOG: Which ETF Is Best Long Term?

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We Compare VOO vs VOOG: Vanguard S&P 500 ETF (VOO) vs Vanguard S&P 500 Growth ETF (VOOG)

These two Vanguard Exchange Traded Funds (ETFs) are very popular.  This article will help you decide between VOO and VOOG.VOO vs VOOG Comparison

VOO vs VOOG

The main difference between VOO and VOOG is the index the ETF tracks.  VOO tracks the S&P 500 Index while VOOG tracks the growth section of the S&P 500 Index.

VOOG holds more growth stocks from the S&P 500.  As a direct opposite, Vanguard’s VOOV includes more value stocks from the S&P 500.

By investing in VOOG or VOOV you are making a bet on either growth or value.  Growth has outperformed over the last 10 years.  However, value stocks usually outperform over the long term.

VOO provides a nice balance of growth and value.  This way you don’t have to guess which will be better in the future.

Another significant difference is the expense ratio.  VOO has an expense ratio of 0.03%.  VOOG has an expense ratio of 0.1%.  That is more than triple the cost!

VOO

  • Tracks the S&P 500 Index
  • Has an expense ratio of 0.03%
  • Holds 508 stocks
  • Dividend Yield 1.21%
  • VOO Institutional Fund Equivalent (VIIX)

VOOG

  • Tracks the S&P Growth Index
  • Has an expense ratio of 0.1%
  • Holds 242 stocks
  • Dividend Yield 0.52%
  • Similar to (VUG)

 

VOO vs VOOG Performance

VOO and VOOG have performed similarly over the last 10 years with VOOG beating VOO by ~ 2% annually.  This is likely due to VOOG’s increased focus on growth compared to VOO.

Both VOO and VOOG have a history of strong returns.  Over the last year, both have had over 30% returns!

Performance Comparison:

VOO vs VOOG Performance Chart

VOOG (Yellow)      VOO (Blue)

Here is another comparison over 10 years:

VOO vs VOOG Performance

VOOG (Yellow)      VOO (Blue)

As you can see from the chart, VOOG has outperformed VOO over the last 10 years.

Similarities between VOO and VOOG:

  • Exchange-Traded Funds (ETFs)
  • Similar Performance Over The Long-Term
  • Low Expense Ratios
  • Vanguard Funds

 

VOO and VOOG Differences

VOO vs VOOG primarily differs in that VOOG tracks the S&P 500 Growth Index while VOO tracks the S&P 500 Index.  VOOG is also more than 3 times as expensive compared to VOO (0.1% vs 0.03%).

VOO tracks the S&P 500 Index

VOOG tracks the S&P 500 Growth Index

Lastly, VOO has double the number of holdings compared to VOOG.  This makes sense because VOOG is comprised of only the growth stocks that are in the S&P 500.  It leaves out most of the value stocks.

Differences between VOO and VOOG:

  • Different Number Of Holdings (~508 vs ~242)
  • Expense Ratio (0.03% vs 0.1%)
  • Index They Track (S&P 500 vs Growth)

 

VOO vs VOOG Holdings

VOOG is 56% technology while VOO is 36%.  VOO is a broad-based fund diversified in several sectors of the market.  VOOG is heavily weighted into the technology sector.

Here they are side by side:

VOO vs VOOG Holdings Comparison

VOO vs VOOG Top Holdings Difference

The top 10 holdings for VOOG make up 52% of its portfolio while VOO’s top 10 holdings make up 30%.  This means the performance of a few stocks like Apple, Microsoft, and Amazon will have a big impact on the overall performance of VOOG.

 

VOO Profile

  • Fund Inception: 2010
  • Expense Ratio: 0.03%
  • Number Of Stocks: 508
  • 10-Year Performance 16.41%
  • Top 10 Holdings: 31%
  • Admiral Fund (VFIAX)

 

Vanguard S&P 500 ETF (VOO) is a very popular ETF that tracks the S&P 500 index.  VOO has over $829.0 billion in fund total net assets.

The fund invests in technology, healthcare, financials, industrials, and other industries and has a very low expense ratio.

VOO Performance

Vanguard’s VOO seeks to mimic the performance returns of the S&P 500 index.  The S&P 500 and VOO should always have overlapping performance returns.

VOO vs S&P 500 Index Performance

VOO (Blue)      S&P 500 (Yellow)

VOO Top 10 Holdings

VOO Top Holdings

Vanguard’s VOO is largely made up of Apple, Microsoft, Alphabet, Amazon, and Tesla but also provides exposure to over 500 other stocks.

 

VOOG Profile

  • Fund Inception: 2010
  • Expense Ratio: 0.1%
  • Number Of Stocks: 242
  • 10-Year Performance 18.89%
  • Top 10 Holdings: 53.7%
  • Similar to VUG

 

Vanguard S&P 500 Growth ETF (VOOG) is an ETF focused on growth companies.  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 currently has an expense ratio of 0.1%.  This is over three times more than VOO which has an expense ratio of 0.03%.

Here is what a 0.07% fee (difference between VOOG and VOO) will cost over 30 years.

Assuming you start with an initial investment of $100,000 and contribute $10,000 each year, over 30 years.  You will have roughly ~$57,000 less in your account.

This does not include costs to buy and sell your shares.

VOOG Performance

Vanguard’s VOOG has outperformed the S&P 500 over the last 10 years:

VOOG vs S&P 500 Performance

VOOG (Blue)      S&P 500 (Yellow)

VOOG Top 10 Holdings

VOOG Top Holdings

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 make up a large number of its holdings (over 50%).  This means that a few stocks can cause VOOG’s price to change dramatically.

 

How To Invest In VOO and VOOG

There are two easy ways to invest in VOO or VOOG commission-free.

  1. Vanguard
  2. M1 Finance (Use this link for $50 when you open a new account)

Both of these options are free.  This is important because as we saw in our earlier example, fees can lower your portfolio returns.

I like M1 Finance as the best option because it gives you the flexibility to purchase VOO, VOOG, and thousands of other stocks.

M1 Finance also lets you purchase fractional shares.  This is great for VOO and VOOG due to their high prices per share (~$429/Share and ~$288/share respectively).

 

Which is Better VOO or VOOG?

Both VOO and VOOG are great long-term investments.  VOO offers a similar asset allocation and increased diversification at a much lower cost of only 0.03%.

As we saw earlier, VOOG beat VOO by 3% annually.  If those returns continue for the next 10 years it would make the higher cost of VOOG worth it.

However, we can’t be sure VOOG will continue to outperform VOO since past performance does not predict future returns.  VOO may beat VOOG over the next 10 years even with a lower expense ratio.

That would be a win-win for VOO investors!

For those reasons, I would say VOO is the better option.  It gives you similar returns at a guaranteed lower cost.

I also like that VOO is less volatile compared to VOOG.

A fund to consider as an alternative to VOOG is the Vanguard Growth ETF (VUG). VUG has a similar profile and returns but with a lower expense ratio (0.04%).

 

Is VOO or VOOG Better for Financial Independence?

Both VOO and VOOG can help you reach Financial Independence Retire Early (FIRE).  They both have similar returns on investment.  They also have performed great over the last 10 years.

I would prefer VOO because I’m a big fan of keeping fees to a minimum.  It doesn’t get much better than VOO with a tiny expense ratio of 0.03%.

I would also suggest looking into other funds that give you more diversification like VTSAX.

 

My Winner: VOO

My winner is VOO based on its lower expense ratio of 0.03%.  I always lean towards the lower-cost option when it comes to my investments.

Regardless of whether you choose VOO or VOOG, the important part is investing regularly in low-cost funds over the long term.  That is the formula for wealth!

If you like ETF comparisons like these check out more in our related posts below.

 


Disclaimer
This post may have affiliate links, which means I may receive commissions if you choose to purchase through links I provide (at no extra cost to you). Thank you for supporting the work I put into this site!

This information is my opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
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