We Compare VUG vs VOO: Vanguard Growth ETF (VUG) vs Vanguard S&P 500 ETF (VOO)
These two Exchange Traded Funds (ETFs) are very popular.
This article will help you decide between VUG and VOO.
VUG vs VOO
The main difference between VUG and VOO is the index the ETF tracks. VUG tracks the CRSP US Large Cap Growth Index, while VOO tracks the S&P 500 Index.
VUG tracks the CRSP US Large Cap Growth Index
VOO tracks the S&P 500 Index
By choosing VUG, you are making a bet on growth stocks to continue to outperform as it has over the last 10 years.
In contrast, VOO provides a nice balance of growth and value.
This way, you don’t have to guess which will be better.
Another significant difference is the number of holdings in each ETF. VUG holds fewer stocks compared to VOO (280 vs 513).
This makes VUG more volatile compared to VOO.
- Tracks the CRSP US Large Cap Growth Index
- Expense Ratio: 0.04%
- Holds 280 Stocks
- Dividend Yield: 0.46%
- Similar ETF (VOOG)
- Tracks the S&P 500 Index
- Expense Ratio: 0.03%
- Holds 513 Stocks
- Dividend Yield: 1.34%
- Equivalent Admiral Shares (VFIAX)
VUG vs VOO Performance
VUG and VOO have performed differently over the last 10 years, with VUG beating VOO by more than 2% 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 VOO performance on a chart:
VUG (Blue) VOO (Yellow)
As you can see, VUG has significantly beaten VOO over the last 10 years.
That annual 2% adds up over time.
Similarities between VUG and VOO:
- Vanguard Exchange-Traded Funds (ETFs)
- Similar Amount Of Holdings (280 vs 513)
- Low Expense Ratios (0.04% vs 0.03%)
- Both Have Equivalent Admiral Funds (VIGAX & VFIAX)
VUG vs VOO Holdings
VOO has almost double the number of holdings compared to VUG (513 vs 280).
VUG is also technology-heavy, with the technology sector making up 57% of VUG assets compared to 36% with VOO.
Another big difference is that financials make up 13% of VOO while only 3% of VUG.
VUG and VOO Differences
The main difference between VUG and VOO is that VUG tracks the CRSP US Large Cap Growth Index while VOO tracks the S&P 500 Index. This makes VUG growth-focused, while VOO offers a more balanced profile.
VUG has also outperformed VOO by 2% annually over the last 10 years.
This 2% has made a big difference in overall returns.
However, there is no guarantee VUG will outperform over the next 10 years.
Differences between VUG and VOO:
- Performance Returns
- Index The Fund Tracks
- Fund Inception: 2004
- Expense Ratio: 0.04%
- Number Of Stocks: 280
- 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.
VUG Top Holdings
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: 0.03%
- Number Of Stocks: 513
- Top 10 Holdings: 31%
Vanguard S&P 500 ETF (VOO) is a very popular ETF that tracks the S&P 500 index.
The fund invests in technology, healthcare, financials, industrials, and other industries and has a very low expense ratio.
It also has over $827 billion in fund total net assets.
Vanguard’s VOO aims to have the same performance returns as the S&P 500 index.
The S&P 500 and VOO should always overlap.
VOO (Blue) S&P 500 (Yellow)
VOO Top Holdings
Vanguard’s VOO comprises Microsoft, Apple, Alphabet, Amazon, and Berkshire and provides exposure to over 500 other stocks.
No Minimum Investment
VUG and VOO are exchange-traded funds (ETFs), so there is NO minimum investment.
Investors looking to buy fractional shares can use platforms like M1 Finance.
Usually, 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 VUG or VOO due to their high prices per share (~$308 and ~$433).
There are two easy ways to invest in VOO or VUG commission-free:
- M1 Finance (Use this link for $50 when you open a new account)
Both of these options are free.
This is important because fees can lower our returns.
M1 Finance is the best option because it allows you to purchase VUG, VOO, 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 quickly find which of your investments has high fees so 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 VOO?
VUG and VOO are great investments. They offer investors the ability to invest in the market at a low expense ratio.
VUG offers more potential returns but also more volatility.
If you believe the success of VUG will continue and are willing to ride the waves of volatility, then VUG might be an excellent investment for you.
VOO makes more sense if you prefer a more balanced approach or don’t believe that growth will continue to outperform.
The expense ratio difference between these two ETFs will not significantly affect total returns.
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 VOO, VUG, and thousands of other stocks/ETFs.
Is VUG a Good Investment?
VUG is a good investment in taxable accounts to maximize growth and capital gains. This is because of its small dividend yield of 0.46%.
Investments with high dividend yields in taxable accounts can create a tax drag on your portfolio.
This can lower your total returns over your investing lifetime.
Generally, it is better to put the following:
High Dividend ETFs In Retirement Accounts (Tax Sheltered Accounts)
Low Dividend ETFs Like VUG In Taxable Accounts
Doing this can help you pay fewer taxes over time.
Read more about is VUG a good investment.
My Winner: VOO
My winner is VOO solely based on the increased diversification it provides. In addition, both ETFs have low expense ratios and have performed well over the last decade.
There is also no guarantee VUG will continue to outperform VOO over the next 10 years.
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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.