Vanguard Russell 1000 Growth ETF vs SPDR S&P 600 Small Cap Growth: Which Fund Is the Better Buy?

Determining whether to hold Vanguard Russell 1000 Growth ETF (NASDAQ:VONG) or State Street SPDR S&P 600 Small Cap Growth ETF (NYSEMKT:SLYG) depends on whether an investor seeks large-cap technology dominance or small-cap market agility.

While both funds focus on growth, they target entirely different segments of the American equity market. VONG tracks established giants and market leaders, whereas the SPDR fund targets smaller, nimbler companies that have met specific growth and profitability criteria, creating distinct risk and return profiles for long-term investors.

Snapshot (cost & size)

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. Dividend yield is the trailing-12-month distribution yield as of the June 30 market close.

VONG is the more affordable option, with a 0.06% expense ratio, offering a notable cost advantage over SLYG’s 0.15%. While SLYG has recently provided a higher payout, the yield gap between the two funds remains narrow at 0.10 percentage points.

Performance & risk comparison

What's inside

Vanguard Russell 1000 Growth ETF allocates its capital to large-cap American corporations, seeking capital appreciation through established market leaders. The portfolio contains 387 holdings and is heavily concentrated in technology at 53.9%, with consumer cyclical and communication services both around 12%. Its largest positions include Nvidia (NASDAQ:NVDA) at 13.1%, Apple (NASDAQ:AAPL) at 11.9%, and Microsoft (NASDAQ:MSFT) at 9%. The fund was launched in 2010. Vanguard Russell 1000 Growth ETF has paid $0.58 per share over the trailing 12 months, which, on its recent $127.8 share price, works out to a 0.5% yield.

State Street SPDR S&P 600 Small Cap Growth ETF mirrors the S&P SmallCap 600 Growth Index, selecting smaller companies with robust sales expansion and market momentum. The fund holds 341 stocks, leaning toward technology at 21.2%, industrials at 18.7%, and healthcare at 14.7%. Its largest positions include Sanmina Corp (NASDAQ:SANM) at 1.8%, Viavi Solutions (NASDAQ:VIAV) at 1.3%, and Viasat Inc (NASDAQ:VSAT) at 1.3%. This ETF was launched in 2000. State Street SPDR S&P 600 Small Cap Growth ETF has paid $0.76 per share over the trailing 12 months, which, on its recent $119.1 share price, works out to a 0.6% yield.

Which fund is the better buy?

The State Street SPDR S&P 600 Small Cap Growth ETF, SLYG, has had a great 52-week period, with its 35.3% total return about double that of the Vanguard offering. The fund has seen its price accelerate since April, reflecting the strongest quarterly performance for U.S. small-cap equities since 1991.

The Vanguard Russell 1000 Growth ETF, meanwhile, sees its 52-week lag of SLYG due to its weighting in large-cap stocks: 88% of VONG is in large-cap stocks and just 2% in small caps. It has missed the small-cap rally because it is barely in the category.

If you’re looking for a small-cap fund to buy, the State Street fund is the pick here. But if you’re seeking the better fund regardless of strategy, then VONG wins this battle. The fund has bested SLYG over the 3-, 5-, and 10-year time frames, returning 22.5%, 13.7%, and 18.5% annualized, respectively. The State Street fund has been good, but not as good as the Vanguard ETF, returning 16.4%, 5.6% and 10.9% over the 3-year, 5-year, 10-year look-backs, respectively.

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

Brendan Coffey has positions in Vanguard Scottsdale Funds - Vanguard Russell 1000 Growth ETF. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Viavi Solutions. The Motley Fool has a disclosure policy.