DIA vs. VUG: Is Dow Stability or Big Tech Growth the Better Choice for Investors?

Vanguard Growth ETF (NYSEMKT:VUG) and SPDR Dow Jones Industrial Average ETF Trust (NYSEMKT:DIA) differ most in their sector exposures, number of holdings, and cost, with VUG offering broader diversification and lower fees, while DIA emphasizes blue-chip stability and higher income.

Both VUG and DIA track large-cap U.S. equities, but with distinct approaches: VUG holds over 160 growth-oriented companies, while DIA follows the iconic Dow Jones Industrial Average, investing in just thirty established blue-chip stocks. This comparison unpacks how these differences play out in cost, performance, risk, and portfolio makeup.

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.

VUG looks more affordable with its 0.04% expense ratio, while DIA charges 0.16%. Investors seeking more income may find DIA’s 1.4% dividend yield attractive compared to VUG’s 0.4% payout.

Performance & Risk Comparison

What's Inside

DIA tracks the Dow Jones Industrial Average, a price-weighted index of thirty blue-chip U.S. stocks. The fund leans into Financial Services (28%), Technology (20%), and Industrials (15%), with top holdings including Goldman Sachs Group Inc (NYSE:GS), Caterpillar Inc (NYSE:CAT), and Microsoft Corp (NASDAQ:MSFT). With 28 years of history and just thirty holdings, DIA offers concentrated exposure to established leaders but may miss out on newer growth trends.

By contrast, VUG spreads its assets across 166 companies, with a strong tilt toward Technology (64%), followed by Consumer Cyclical and Healthcare. Its largest positions—Apple Inc (NASDAQ:AAPL), NVIDIA Corp (NASDAQ:NVDA), and Microsoft Corp—give it a heavy growth orientation. This broader scope means VUG is more sensitive to tech sector swings but captures a wider slice of the U.S. growth landscape.

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What This Means For Investors

Vanguard Growth ETF (VUG) and SPDR Dow Jones Industrial Average ETF Trust (DIA) are two of the largest and best-known ETFs around, and they share many similar attributes. However, there are some key differences that set them apart from one another. Here's what investors should know.

To start, let's consider DIA. It tracks the Dow Jones Industrial Index -- one of the oldest and most iconic stock market benchmarks around. However, the Dow Jones is a relatively small index, with only 30 stocks. Therefore, it leaves out many large companies investors might expect, such as Meta Platforms, Alphabet, and Netflix. Moreover, the index is price-weighted, meaning high-priced stocks like Goldman Sachs and Caterpillar are its top two holdings, rather than tech megacaps like Nvidia and Microsoft. As for other details, DIA offers a relatively modest expense ratio of 0.16% and a slim dividend yield of 1.4%.

VUG, on the other hand, boasts more holdings (166), giving it a broader composition. It also sports a lower expense ratio -- a near rock-bottom fee of 0.04%. Furthermore, tech growth-oriented tech megacaps like Nvidia and Microsoft are among its top holdings. As a result, the fund has delivered excellent returns over the last five years, with a compound annual growth rate (CAGR) of 14.5% (DIA has generated a CAGR of 11.1% over this same period) Yet, this focus on growth comes with a trade-off: VUG has experienced more volatility, with a max drawdown of nearly 35% during the downturn in 2022.

In summary, VUG and DIA are both solid choices for investors to consider. Slightly more aggressive investors may be drawn to VUG with its higher returns and higher volatility. Meanwhile, more conservative investors may favor DIA due to its higher dividend yield and greater price stability.

Glossary

ETF (Exchange-traded fund): A fund that trades on stock exchanges, holding a basket of underlying securities.
Expense ratio: Annual fund operating costs expressed as a percentage of the fund's average assets.
Assets under management (AUM): The total market value of all assets managed within a fund.
Diversification: Spreading investments across many holdings or sectors to reduce the impact of any single position.
Blue-chip stocks: Shares of large, established, financially strong companies with long records of stable performance.
Dividend yield: Annual dividends per share divided by the current share price, expressed as a percentage.
Beta: A measure of an investment's volatility compared with the overall market, often the S&P 500.
Max drawdown: The largest peak-to-trough decline in an investment's value over a specific period.
Total return: Investment performance including price changes plus all dividends and distributions, assuming reinvestment.
Price-weighted index: An index where each stock's influence is based on its share price, not its market value.
Growth-oriented companies: Firms expected to grow earnings faster than the market, often reinvesting profits instead of paying dividends.
Sector exposure: The proportion of a portfolio invested in specific industries, such as technology or financial services.

Jake Lerch has positions in Alphabet, Caterpillar, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Apple, Goldman Sachs Group, Meta Platforms, Microsoft, Netflix, Nvidia, and Vanguard Index Funds - Vanguard Growth 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.