Better Vanguard ETF: VOO vs. VOOG

The Vanguard S&P 500 Growth ETF (NYSEMKT:VOOG) focuses on growth stocks and has outperformed over the past year, while the Vanguard S&P 500 ETF (NYSEMKT:VOO) charges less, yields more, and provides broader U.S. market exposure.

Both VOOG and VOO aim to track large-cap U.S. stocks, but their approaches differ. VOOG isolates the growth segment of the S&P 500 Index (SNPINDEX:^GSPC), while VOO tracks the full S&P 500 Index. For investors weighing focused growth exposure against total market breadth, comparing their costs, performance, and portfolio makeup can help clarify which may fit best.

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 is more affordable to hold, with a 0.03% expense ratio compared to 0.07% for VOOG, and it also pays out a higher dividend yield at 1.1% versus 0.5% for VOOG.

Performance & risk comparison

What's inside

VOO seeks to replicate the full S&P 500 Index, holding 505 stocks as of its 15.3-year track record. Its sector mix is broad: technology (37%), financial services (12%), and consumer cyclical (11%). Top holdings include NVIDIA (NASDAQ:NVDA) at 7.38%, Apple (NASDAQ:AAPL) at 7.08%, and Microsoft (NASDAQ:MSFT) at 6.25%. This breadth provides exposure across the U.S. economy and may help smooth sector-specific volatility over time.

VOOG, by contrast, isolates the S&P 500's growth names, concentrating 58% in technology, 12% in consumer cyclicals, and 10% in financial services. Its top three holdings are NVIDIA at 13.53%, Apple at 5.96%, and Microsoft at 5.96%. This results in a more concentrated portfolio (212 holdings) with greater exposure to tech-driven growth trends, but also amplifies sector and stock-specific risks.

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What this means for investors

The Vanguard S&P 500 Growth ETF (VOOG) and the Vanguard S&P 500 ETF (VOO) are designed for different types of investors. VOO is for those who want more stability, which is provided by the ETF's broader stock diversification and demonstrated by its lower max drawdown.

VOOG is for those who are willing to take on more risk for greater growth, but this tradeoff includes a higher expense ratio. VOOG's dividend is lower as a consequence of its heavy weighting towards tech stocks, which tend to pay lower or no dividends compared to other industries. The fact that Nvidia is VOOG's top holding at 13.53%, which is more than double the next two holdings, means the ETF's fortunes are more impacted by Nvidia's performance compared to VOO.

VOOG's outsized focus on the tech sector, especially in light of the rising artificial intelligence industry, gives it the potential to outperform the broader S&P 500 Index. However, for investors who want a low-risk, long-term investment at a lower expense ratio, the VOO ETF is a good pick.

Glossary

Expense ratio: The annual fee, as a percentage of assets, that investors pay to own a fund.
Dividend yield: The annual dividends paid by a fund, expressed as a percentage of its current price.
Beta: A measure of a fund's volatility compared to the overall market; higher than 1 means more volatile.
Assets Under Management (AUM): The total market value of all assets a fund manages for investors.
Max drawdown: The largest percentage drop from a fund's peak value to its lowest point over a specific period.
Growth stock: A stock expected to grow earnings or revenue faster than the overall market.
Sector diversification: Spreading investments across different industry sectors to reduce risk.
Portfolio concentration: The degree to which a fund's assets are invested in a small number of holdings or sectors.
Consumer cyclical: Companies whose sales and profits tend to rise and fall with the economic cycle, like retailers and automakers.
Total return: The investment's price change plus all dividends and distributions, assuming those payouts are reinvested.

Robert Izquierdo has positions in Apple, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, 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.