VUG vs. VOOG – Which Vanguard ETF for Large Growth Stocks?
VUG and VOOG are two ETFs from Vanguard to capture U.S. large cap growth stocks. But is one better than the other? Let’s compare them.
// SUMMARY:
First let’s talk about VUG. It’s the Vanguard Growth ETF. The fund launched in 2004, has over $67 billion in assets, and seeks to track the CRSP US Large Growth Index. These are large cap growth stocks which comprise roughly half of the famous S&P 500.
These stocks include household names like Apple, Microsoft, and Amazon, which are present in both funds being discussed here. Investors have been flocking to large cap growth stocks in the early 2020’s after the past decade when large stocks beat small stocks and growth stocks beat value stocks.
Now let’s talk about VOOG. It’s the Vanguard S&P 500 Growth ETF. This fund launched later in 2010, is much less popular with only about $6 billion in assets, and seeks to track the S&P 500 Growth Index. As the name suggests, these are growth stocks from the S&P 500 index.
As such, VUG and VOOG capture the exact same market segment, albeit with different indexes. For all intents and purposes, these funds should be considered interchangeable. The primary difference between them is that VOOG has to pay to license the Standard and Poor’s name and thus has a higher fee of 0.10%, compared to 0.04% for VUG.
In some cases with pairs like these, we might expect to get a little more bang for our buck with the usual profitability screen from the S&P index, but in this case the CRSP index that VUG uses is no slouch, and employs some EPS and earnings filters. Consequently, factor exposure is close enough between these two to not objectively prefer one over the other. Their subsequent historical performance has also been extremely close.
As a result, I think it’s reasonable to simply go with the lower fee of VUG. This is true for both the long term investor and the day trader, as VUG also has comparatively greater liquidity than VOOG.
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