Growth funds have been growing in popularity recently due to the particularly stellar run of Big Tech. Vanguard offers several low-cost Growth ETFs. Here we'll explore the best Vanguard Growth funds.
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In a hurry? Here's the list:
- VUG – Vanguard Growth ETF
- MGK – Vanguard Mega Cap Growth ETF
- VONG – Vanguard Russell 1000 Growth ETF
- VOT – Vanguard Mid-Cap Growth ETF
- VBK – Vanguard Small-Cap Growth ETF
Introduction – Why Growth Stocks?
Growth stocks are precisely that – stocks expected to grow quicker than average from innovation. Companies classified as Growth stocks reinvest profits into their own future projects and R&D, making them comparatively more tax-efficient because they pay low or no dividends.
Growth stocks typically trade at higher P/E (price-to-earnings) ratios and can even be viewed as “overvalued.” Think Tesla, Uber, Amazon, etc. Qualities of these companies that are typical of Growth stocks include patented technology, unique products or services, loyal customers, and/or controlling market share in their industry. Investors are usually willing to overlook current earnings shortcomings in hopes that the company will grow significantly and rapidly in the near future.
While Value stocks have beaten Growth stocks historically, Growth has crushed Value over the past decade or so, due largely to the impressive run by Big Tech. Many speculate that Growth will continue its meteoric rise in the near future. Vanguard makes it easy to access Growth stocks with low-fee, high-liquidity ETFs.
Let's explore the 5 best Vanguard Growth funds.
The 5 Best Vanguard Growth Funds
Vanguard offers several popular Growth ETFs across different cap sizes for various indices:
VUG – Vanguard Growth ETF
The Vanguard Growth ETF (VUG) is the most popular Growth fund out there, with over $125 billion in assets. The fund invests in large-cap Growth stocks, tracking the CRSP US Large Cap Growth Index. Think of this as the Growth half of the S&P 500. This ETF has over 250 holdings and an expense ratio of 0.04%.
MGK – Vanguard Mega Cap Growth ETF
Investors wanting to specifically target mega-caps (think Apple, Google, Microsoft, Amazon, etc.) can use the Vanguard Mega Cap Growth ETF (MGK). This fund seeks to track the CRSP US Mega Cap Growth Index. It has over 100 holdings and an expense ratio of 0.07%.
VONG – Vanguard Russell 1000 Growth ETF
Investors wanting slightly more broadly diversified exposure to large-cap Growth stocks may target the Russell 1000 Growth Index via the Vanguard Russell 1000 Growth ETF (VONG). This fund has over 400 holdings and an expense ratio of 0.08%.
VOT – Vanguard Mid-Cap Growth ETF
Those seeking mid-cap Growth stocks can use the Vanguard Mid-Cap Growth ETF (VOT), tracking the CRSP US Mid Cap Growth Index, which measures the performance of medium-sized Growth stocks. This ETF has over 150 holdings and an expense ratio of 0.07%.
VBK – Vanguard Small-Cap Growth ETF
Similarly, small-cap Growth stocks can be accessed with the Vanguard Small-Cap Growth ETF (VBK), which seeks to track the CRSP US Small Cap Growth Index. This fund has over 500 holdings and an expense ratio of 0.07%.
Where to Buy These Vanguard Growth ETFs
M1 Finance offers all these Vanguard Growth ETFs. It has zero transaction fees, zero account fees, and offers fractional shares, dynamic rebalancing, and a modern, user-friendly interface and mobile app. I wrote a comprehensive review of M1 Finance here.
Disclaimer: While I love diving into investing-related data and playing around with backtests, this is not financial advice, investing advice, or tax advice. The information on this website is for informational, educational, and entertainment purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. I always attempt to ensure the accuracy of information presented but that accuracy cannot be guaranteed. Do your own due diligence. All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future results. Opinions are my own and do not represent those of other parties mentioned. Read my lengthier disclaimer here.
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