VOOG vs. VONG: Which Powerhouse Vanguard ETF Is the Stronger Choice for Investors?

The Vanguard Russell 1000 Growth ETF (NASDAQ:VONG) and the Vanguard S&P 500 Growth ETF (NYSEMKT:VOOG) are both designed for long-term capital appreciation by targeting U.S. companies with robust growth characteristics.

While both ETFs are managed by Vanguard and share nearly identical risk profiles, their underlying benchmarks result in different concentrations and performance outcomes.

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-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

These two ETFs are fairly equally matched in terms of structure. With nearly identical expense ratios, betas, and dividend yields, investors can expect only marginal differences in risk profile, income potential, and fees.

Performance & risk comparison

What's inside

VOOG holds 148 stocks, selecting only the growth-oriented names from the broader S&P 500. Its sector allocation is heavily weighted toward technology at 52% of assets, communication services at 16%, and financial services at 9%. Its largest positions include Nvidia(NASDAQ:NVDA), Microsoft(NASDAQ:MSFT), and Apple(NASDAQ:AAPL). The fund was launched in 2010 and has paid $0.37 per share in dividends over the trailing 12 months.

VONG provides broader exposure with 370 holdings derived from the Russell 1000 Growth Index. Its sector makeup includes technology at 54% of assets, communication services at 17%, and industrials at 8%. Top holdings include Nvidia, Apple, and Alphabet(NASDAQ:GOOGL). The fund was launched in 2010. Vanguard Russell 1000 Growth ETF has paid $0.58 per share in dividends over the trailing 12 months.

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

Which looks like the better buy

VONG and VOOG are similar in several ways. Both are held under the Vanguard name and were launched in 2010, offering a robust track record and large assets under management (AUM).

The two funds also offer nearly identical betas and max drawdowns, suggesting similar risk profiles and volatility over the past five years. Investors can also expect to pay roughly the same amount in fees, as these ETFs share similar expense ratios.

The primary difference to consider is diversification. VOOG is the narrower of the two funds, holding only stocks from within the S&P 500 that exhibit growth characteristics. VONG holds more than twice as many stocks as VOOG, offering exposure to a broader swath of large-cap growth companies.

Greater diversification comes with both risk and reward. The advantage is that holding more stocks can better protect against risk, especially during market downturns. The downside, however, is that there's also a greater chance that lower-performing stocks will drag down the fund's overall performance.

Between these two ETFs, VOOG has fairly significantly outperformed VONG in both one- and five-year total returns.

The right ETF for you will depend on your goals and risk tolerance. VOOG has been the higher performer in recent years, but its smaller portfolio could potentially expose investors to greater volatility during a downturn. VONG offers more diversification, but at the expense of total returns.

Katie Brockman has positions in Vanguard Admiral Funds - Vanguard S&P 500 Growth ETF and Vanguard Scottsdale Funds - Vanguard Russell 1000 Growth ETF. The Motley Fool has positions in and recommends Alphabet, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.