IWO vs. VOOG: How Small-Cap Diversification Compares to Large-Cap Growth
Key Points
IWO carries a much higher expense ratio than VOOG but offers a marginally higher dividend yield.
VOOG and IWO posted similar one-year returns, but IWO experienced a much steeper five-year drawdown.
Sector exposures differ sharply, with IWO leaning into healthcare and industrials while VOOG focuses on technology.
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The Vanguard S&P 500 Growth ETF (NYSEMKT:VOOG) and the iShares Russell 2000 Growth ETF (NYSEMKT:IWO) both aim to capture growth stocks, but their approaches and risk profiles diverge.
VOOG tracks large, established U.S. growth companies in the S&P 500, while IWO covers a much broader basket of small-cap growth names. That makes this comparison relevant for investors weighing the stability of large-caps against the potential of small-caps.
Snapshot (cost & size)
| Metric | VOOG | IWO |
|---|---|---|
| Issuer | Vanguard | iShares |
| Expense ratio | 0.07% | 0.24% |
| 1-yr return (as of March 26, 2026) | 18.62% | 19.81% |
| Dividend yield | 0.50% | 0.54% |
| Beta (5Y monthly) | 1.12 | 1.45 |
| AUM | $21.9 billion | $12.2 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months.
IWO charges a much steeper expense ratio than VOOG, which could make VOOG more affordable over the long term. However, IWO offers a marginally higher dividend yield, appealing to those seeking some income alongside growth.
Performance & risk comparison
| Metric | VOOG | IWO |
|---|---|---|
| Max drawdown (5 y) | -32.74% | -42.02% |
| Growth of $1,000 over 5 years (total returns) | $1,880 | $1,127 |
VOOG and IWO delivered nearly identical one-year returns as of late March 2026, but the ride has been bumpier for IWO. Over five years, IWO experienced a sharper maximum drawdown and lower cumulative growth, highlighting the higher risk and volatility of small-cap growth stocks compared to large-cap peers.
What's inside
IWO tracks over 1,100 small-cap growth companies, making it one of the most diversified U.S. growth ETFs in terms of number of holdings. The fund leans heaviest into healthcare (making up 24% of assets), followed by industrials and technology. Its top holdings are Bloom Energy, Fabrinet, and Credo Technology Group, none of which individually dominate the portfolio.
VOOG, in contrast, focuses on the growth segment of the S&P 500, with a much larger tilt toward technology (47%) and communication services. It holds just 140 stocks, and its portfolio is more concentrated at the top — with Nvidia, Microsoft, and Apple making up a sizable portion of assets.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Each of these ETFs has a distinct advantage. IWO shines with its extensive diversification, while VOOG’s large-cap focus has helped it earn above-average returns over time.
Generally, small-cap stocks have greater growth potential than their more established peers. Because VOOG is dominated by tech stocks, however, it’s outperformed IWO over the last five years — as big names like Nvidia have earned explosive returns.
VOOG’s reliance on mega-cap tech can also be a drawback for some investors, however. Nearly half of its portfolio is dedicated to the tech sector, and its top three holdings alone make up over 30% of assets. If the tech industry faces volatility in the future, VOOG could be hit harder than IWO.
Although small-caps tend to be more volatile than large-caps, IWO offers immense diversification. Its top three stocks collectively account for less than 5% of assets, and tech only makes up around 22% of the fund. That can help reduce its volatility during a tech drawdown.
Overall, VOOG can be a good choice for investors seeking mega-cap tech exposure with higher long-term earning potential, while IWO may best serve those who prefer added diversification with less of a tilt toward tech stocks.
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Katie Brockman has positions in Vanguard Admiral Funds - Vanguard S&P 500 Growth ETF. The Motley Fool has positions in and recommends Apple, Bloom Energy, Microsoft, and Nvidia and is short shares of Apple. The Motley Fool has a disclosure policy.
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