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.
In a hurry? Here are the highlights:
- VUG and VOOG are two popular index funds from Vanguard for U.S. large cap growth stocks.
- VUG is much more popular with over $67 billion in assets. VOOG has about 1/10 of that.
- VUG seeks to track the CRSP US Large Growth Index. VOOG seeks to track the S&P 500 Growth Index.
- Factor exposure and performance have been close enough to not objectively prefer one over other.
- VUG is cheaper with a fee of 0.04%, compared to 0.10% for VOOG, and conveniently also has greater liquidity.
- This is a good pair for tax loss harvesting.
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If you've arrived here, you likely already know that stocks are a significant driver of portfolio performance, that index funds are a great way to get immediate diversification, and that Vanguard has some of the best, cheapest index funds around. Here we're looking at two ETFs for U.S. large cap growth stocks, VUG and VOOG.
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.
These would also obviously make a good pair for tax loss harvesting.
Conveniently, both of these funds should be available at any major broker, including M1 Finance, which is the one I'm usually suggesting around here.
Do you own VUG or VOOG in your portfolio? Let me know in the comments.
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. I mention M1 Finance a lot around here. M1 does not provide investment advice, and this is not an offer or solicitation of an offer, or advice to buy or sell any security, and you are encouraged to consult your personal investment, legal, and tax advisors. All examples above are hypothetical, do not reflect any specific investments, are for informational purposes only, and should not be considered an offer to buy or sell any products. 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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