The Vanguard S&P 500 Growth ETF (VOOG) and the Vanguard Growth ETF are both popular “factor” ETFs sponsored by Vanguard. In this context, factors are quantitative characteristics that index providers assign to stocks. Investors (including myself) evaluating VUG vs VOOG may find it somewhat odd that Vanguard sponsors two different large-cap growth funds that look and act nearly identical.
A quick reminder that this site does NOT provide investment recommendations. Fund comparisons (such as this one) are not conducted to identify the “best” fund (since that will vary from investor to investor based on investor-specific factors). Rather, these fund comparison posts are designed to identify and distinguish between the fund details that matter versus the ones that don’t.
The Short Answer
Both VOOG and VOOG own track large-cap growth indices. Historical performance has been nearly identical and I consider these two funds identical and interchangeable. VOOG is more expensive, but it is an immaterial difference in my opinion.
The Long Answer
Historical Performance: VUG vs VOOG
Both VOOG and VUG were launched in September 2010. Since then, performance has been identical with an annualized difference of only .06%! Interesting this is the exact same as the difference in the two funds’ expense ratios. The cumulative performance differential is about 3.5%.
Differences Between VUG and VOOG
The primary difference between these two funds is that VUG tracks the CRSP US Large Cap Growth Index, while VOOG tracks the broader S&P 500 Growth Index. Both have a similar number of stocks as well; VOOG owns 230 stocks, while VUG owns 253 (data as of 1/31/2023, per Vanguard).
Both VUG and VOOG hold essentially 100% US stocks, so I will not dig into country exposures or market classification here. For all intents and purposes, the two funds have identical country exposures.
Market Cap Exposure
Overall, the market cap exposures of VUG and VOOG are nearly identical.
There are some significant differences in sector weights, although these differences have not impacted performance historically.
VUG’s expense ratio is .04%, while VOOG’s expense ratio is .10%. Yes, VUG is 150% more expensive than VOOG, but we’re talking about 6 basis point! This in an non-issue in my opinion.
ETFs are free to trade at many brokers and custodians, so both VUG and VOOG should be free to trade in most cases. Additionally, these funds are among the largest ETFs and are very liquid. The bid-ask spread of both VUG and VOOG is very low, so individual investor trades will not generally be large enough to “move” the market.
Tax Efficiency & Capital Gain Distributions
ETFs are typically more tax-efficient than mutual funds, due to their ability to avoid realizing capital gains through like-kind redemptions (a process that is beyond the scope of this post). Neither VUG nor VOOG has ever made a capital gains distribution (nor do I expect them to moving forward). Thus, these funds are about as tax-efficient as any fund can be and either fund is appropriate in taxable accounts.
Final Thoughts: VUG vs VOOG
VOOG and VUG are identical in nearly every way even though they track slightly different indices. Portfolio composition differs a bit, but historical performance has been identical. Personally, I consider these two funds identical and interchangeable.