Better Growth Stock ETF: Vanguard's Large-Cap VUG vs. Invesco's Small-Cap RZG

The Vanguard Morningstar Growth ETF (NYSEMKT:VUG) provides ultra-low-cost exposure to domestic large-cap growth stocks, whereas the Invesco S&P SmallCap 600 Revenue ETF (NYSEMKT:RZG) targets small-cap growth companies by weighting them according to a growth score that incorporates metrics such as revenue.

This comparison looks at two very different ways to capture market momentum. The Vanguard Morningstar Growth ETF tracks the performance of the CRSP U.S. Large Cap Growth Index, focusing on established leaders. In contrast, the Invesco S&P SmallCap 600 Revenue ETF screens for growth while weighting constituents based on top-line results.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

Cost-conscious investors may find the Vanguard fund more affordable, as it carries an expense ratio of 0.03% versus 0.35% for the Invesco fund. The dividend yield gap is minimal, with the two funds recently paying 0.4% and 0.5%.

Performance & risk comparison

The Vanguard Morningstar Growth ETF tracks the CRSP U.S. Large Cap Growth Index, employing a full-replication strategy to capture the performance of American growth giants. It maintains a concentrated portfolio where top holdings include Nvidia (NASDAQ:NVDA) at 12.81%, Apple (NASDAQ:AAPL) at 12.60%, and Microsoft (NASDAQ:MSFT) at 9.59%. This tech-heavy fund allocates 56% to technology, 15% to communication services, and 12% to consumer cyclical companies across 166 holdings. The Vanguard fund launched in 2004, and has paid $0.34 per share over the trailing 12 months, which on its recent ~$88.90 share price works out to a 0.4% yield.

The Invesco S&P SmallCap 600 Revenue ETF provides exposure to the growth subset of the S&P SmallCap 600 Index, but it weights its 127 holdings by a growth score rather than market cap. The portfolio is most heavily weighted toward healthcare at 23%, industrials at 17%, and financial services at 16%. Its largest positions include ACM Research (NASDAQ:ACMR) at 2.43%, Protagonist Therapeutics (NASDAQ:PTGX) at 1.95%, and Acadian Asset Management (NYSE:AAMI) at 1.89%. The Invesco fund launched in 2006, and has paid $0.30 per share over the trailing 12 months, which on its recent ~$68.51 share price works out to a 0.5% yield.

For more guidance on ETF investing, check out the full guide at this link.

Which looks like the better buy

The Vanguard Morningstar Growth ETF (VUG) and Invesco S&P SmallCap 600 Revenue ETF (RZG) offer different approaches to investing in the U.S. stock market. Choosing between them depends on which fits better with your portfolio strategy.

VUG is ideal for investors who don't own shares in the fund's large-cap companies. The ETF provides an efficient way to gain exposure to some of the biggest high-growth stocks available. That means you're investing mostly in tech businesses, due to the artificial intelligence boom. However, the technology sector is volatile, and since VUG is market cap-weighted, its top holdings have an outsized impact on the fund's performance. On the plus side, VUG performed a 6-for-1 split in April of 2026 and reduced its expense ratio, making the ETF more affordable for retail investors.

RZG uses a growth score to identify the companies to hold. This involves factors such as sales growth and momentum, that is, price performance over time. Since smaller enterprises have greater potential to expand their businesses than mature large-cap companies, RZG can deliver outsized gains, as demonstrated by its one-year return. On the flip side, small-cap stocks are volatile, contributing to the fund's higher max drawdown.

For investors seeking growth stocks, the ideal approach is to buy both VUG and RZG. There is very little overlap between them, making them a useful pair for portfolio diversification.

Robert Izquierdo has positions in Apple, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Vanguard Morningstar Growth ETF. The Motley Fool recommends Protagonist Therapeutics. The Motley Fool has a disclosure policy.