VUG Has Delivered Larger Gains, VOO Sports a Higher Dividend Yield and Lower Fees

Vanguard Growth ETF (NYSEMKT:VUG) emphasizes large-cap growth stocks with a tech tilt, while Vanguard S&P 500 ETF (NYSEMKT:VOO) delivers broader, more diversified U.S. equity exposure, a higher yield, and a marginally lower expense ratio.

Both VUG and VOO are passively managed by Vanguard, but they serve distinct purposes: VUG targets large-cap growth stocks, concentrating on technology and related sectors, while VOO tracks the S&P 500 Index, representing the 500 largest U.S. companies across a wider sector spectrum. This comparison looks at their cost, returns, risk, composition, and practical differences to help investors decide which may suit their strategy.

Snapshot (Cost & Size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.

VOO looks marginally more affordable on fees, charging 0.03% compared to VUG’s 0.04%, and it also delivers a notably higher dividend yield at 1.1% versus 0.4%, which may appeal to income-focused investors.

Performance & Risk Comparison

What's Inside

VOO holds 505 companies, tracking the S&P 500 Index for over 15 years. Its portfolio spans technology (37%), financial services (12%), and consumer cyclicals (11%). The top holdings are NVIDIA (NASDAQ:NVDA) at 7.38%, Apple (NASDAQ:AAPL) at 7.08%, and Microsoft (NASDAQ:MSFT) at 6.25%, reflecting a still-prominent but less concentrated tech focus than growth-specific funds.

VUG, by contrast, is much more growth-focused, with 52% in technology, 14% in communication services, and 14% in consumer cyclicals. Its top positions are Apple at 11.22%, NVIDIA at 11.15%, and Microsoft at 9.94%, creating a higher concentration in these names. VUG holds 166 stocks, so its sector and stock tilts are more pronounced than VOO’s broader diversification.

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What This Means For Investors

The Vanguard Growth ETF (NYSEMKT:VUG) and Vanguard S&P 500 ETF (NYSEMKT:VOO) are two of the most well-known and well-respected ETFs around, thanks to their low risk profiles, solid performance histories, and low fee structures. And while there is nothing wrong with owning both ETFs, let's compare them head-to-head to see which one comes out on top.

To start, let's note each fund's performance history. Over the last ten years, the VOO has generated a total return of 289%, equating to a compound annual growth rate (CAGR) of 14.5% -- directly in line with the benchmark S&P 500 index. The VUG, by contrast, has outperformed the VOO and S&P 500. With its higher concentration of big tech stocks, the VUG has generated a total return of 389%, with a CAGR of 17.2%.

Turning to yield, the VOO offers a more generous income stream, with a dividend yield of 1.1%, as opposed to 0.4% for the VUG. As for fees, both funds are extremely affordable, but VOO is marginally cheaper, with an expense ratio of 0.03% compared to 0.04% for VUG. Finally, both funds are extremely liquid, with AUM of over $200 billion for VUG and more than $800 billion for VOO.

To sum up, VUG's focus on growth stocks means that it is slightly more volatile, but it has produced higher returns as ample compensation. VOO, by mirroring the S&P 500 index, is less volatile and has produced returns that directly mirror the benchmark index. In addition, VOO's higher dividend yield and lower fees may appeal to income-oriented or cost-conscious investors.

The bottom line: Both ETFs are worthy of consideration for most investors.

Glossary

ETF (Exchange-Traded Fund): A pooled investment fund traded on stock exchanges, holding a basket of assets like stocks or bonds.
Expense ratio: The annual fee, as a percentage of assets, that an ETF or mutual fund charges its shareholders.
Dividend yield: The annual dividends paid by an investment, expressed as a percentage of its current price.
Beta: A measure of an investment's volatility compared to the overall market; higher beta means higher risk.
AUM (Assets Under Management): The total market value of assets that an investment fund manages on behalf of investors.
Max drawdown: The largest percentage drop from a fund’s peak value to its lowest point over a specific period.
Growth stock: A company stock expected to grow earnings or revenue faster than the market average.
Large-cap: Refers to companies with a large market capitalization, typically over $10 billion.
S&P 500 Index: A stock market index tracking the performance of 500 large U.S. companies.
Sector: A group of companies in the same industry or market segment, such as technology or financial services.
Portfolio diversification: Spreading investments across various assets or sectors to reduce risk.

Jake Lerch has positions in Nvidia. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, Vanguard Index Funds - Vanguard Growth ETF, and Vanguard S&P 500 ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.