Exchange-traded funds (ETFs) are a simple and convenient way to gain exposure to a variety of companies. Many low-cost Vanguard index funds reflect the performance of major benchmarks like the S&P500 and the Nasdaq Composite — achieve diversification and broad market exposure. However, some Vanguard funds charge low fees and have features that give them an edge over alternatives.
THE Vanguard S&P 500 Growth ETF (NYSEMKT:VOOG) has crushed the performance of the S&P 500 and Nasdaq Composite this year. Best of all, the fund charges a 0.10% expense ratio, meaning that $1,000 invested in the fund only results in $1 in annual fees.
Here’s how the fund compares to other Vanguard ETFs and why it’s a good buy now.
A growing market
Even if you’ve loosely followed broader market developments over the past couple of years, you probably know that mega-cap companies like Nvidia And Metaplatforms led the major indices to new highs. On June 5, Nvidia surpassed Apple as the second most valuable company in the world. Sectors or funds exposed to these types of stocks have performed quite well so far this year.
THE Vanguard Growth ETF (NYSEMKT:VUG) is one of Vanguard’s most popular funds, with $220 billion in net assets and an expense ratio of just 0.04%. THE Vanguard Mega Cap Growth ETF (NYSEMKT:MGK) is not as large, with only $18 billion in net assets and an expense ratio of 0.06%. But it crushed benchmarks thanks to its heavy exposure to mega-cap growth stocks.
With just $10 billion in net assets, the Vanguard S&P 500 Growth ETF is even smaller. But so far this year, it has beaten the Vanguard Growth ETF, the Vanguard Mega Cap Growth ETF, the S&P 500 and the Nasdaq Composite.
The top holdings of the three funds are the usual suspects of MicrosoftApple, NVIDIA, Amazon, Alphabet, Meta Platforms, etc. But what’s interesting is that the Vanguard S&P 500 Growth ETF includes some important names missing from the other two ETFs. The most remarkable is Broadcomwhich is the eighth largest holding of the Vanguard S&P 500 Growth ETF.
Oracle, UnitedHealth GroupAnd Procter & Gamble are also the top 20 stocks that are not included in the other two ETFs. You’ll also find top dividend stocks like Home deposit in the Vanguard S&P 500 Growth ETF and not in the other two ETFs.
As you weigh the pros and cons of different Vanguard ETFs, it’s important to understand how Vanguard structures its fund portfolio and how that strategy affects holdings in other funds. For example, the Vanguard Value ETF (NYSEMKT:VTV) is, in many ways, the counterpart to the Vanguard Growth ETF. Broadcom, UnitedHealth, Procter & Gamble and Home Depot are all among the fund’s top 10 holdings. However, this excludes Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta Platforms and You’re here.
Meanwhile, the Mega Cap Growth ETF is heavily focused on the best ideas. It has just 79 holdings, compared to 229 for the Vanguard S&P 500 Growth ETF.
Bet big on a few sectors
You can think of the Vanguard S&P 500 Growth ETF as the Vanguard Growth ETF plus some key holdings of the Vanguard Value ETF. Here’s how it compares to Vanguard S&P 500 ETF (NYSEMKT: VOL)
Sector | Vanguard S&P 500 Growth ETF | Vanguard S&P 500 ETF |
|---|---|---|
Computer science | 46.8% | 29.2% |
Discretionary consumption | 14.4% | 10.3% |
Communications Services | 13% | 9.1% |
Health care | 7.4% | 12.3% |
Industrial | 6.5% | 8.8% |
Financial datas | 5.1% | 13.1% |
Basic consumption | 2.8% | 6.2% |
Energy | 1.8% | 4.1% |
Materials | 1.4% | 2.4% |
Real estate | 0.7% | 2.2% |
Utilities | 0.1% | 2.3% |
Data source: Vanguard.
As you can see in the table, the Vanguard S&P 500 Growth ETF is heavily weighted across three sectors and has less exposure to Consumer Staples, Energy, Financials, Healthcare, Industrials , materials, real estate and utilities than the S&P 500. But it doesn’t outright ignore heavy dividend-paying companies — as some of the more aggressive growth funds do.
As mentioned, the Vanguard S&P 500 Growth ETF holds Procter & Gamble, UnitedHealth and Home Depot – which are components of the Dow Jones Industrial Average which reward shareholders with buybacks, dividend growth and organic growth.
The Vanguard S&P 500 Growth ETF’s largest oil and gas holding is not a major integrated company like ExxonMobil Or Chevronbut exploration and production company ConocoPhillips – which focuses on the upstream side of the industry rather than refining, marketing and the rest of the value chain. This is another example of how the Vanguard S&P 500 Growth ETF is more aggressive than a pure S&P 500 fund, but is a more balanced choice than the Vanguard Growth ETF or Vanguard Mega Cap ETF Growth.
A winning formula
If there’s one word that defined stock market winners last year and this year, it’s quality. Investors have paid for companies with industry-leading positions, strong balance sheets and clear paths to sustainable growth and left out smaller companies with greater uncertainty, even though many of these small companies are very cheap.
Quality, regardless of sector, has led the Vanguard S&P 500 Growth ETF to outperform other leading growth-focused ETFs and major indexes so far this year. The combination of a heavy weighting in high-growth stocks and the fastest-growing sectors of the market, while also including more robust industry leaders in slower-growing sectors, has been very effective until present this year.
All told, the ETF has the makeup to beat the S&P 500 over the long term without charging exorbitant fees. Investors looking for a basket of faster-growing, higher-quality S&P 500 stocks without sacrificing value might consider the Vanguard S&P 500 Growth ETF over other Vanguard funds.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Alphabet, Amazon, Apple, Chevron, Home Depot, Meta Platforms, Microsoft, Nvidia, Oracle, Tesla, Vanguard Index Funds-Vanguard Growth ETF, Vanguard Index Funds-Vanguard Value ETF, and Vanguard S&P 500. ETFs. The Motley Fool recommends Broadcom and UnitedHealth Group and 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.
$1,000 in this Vanguard ETF costs just $1 in annual fees, and it beat the S&P 500 and Nasdaq Composite in 2024 was originally published by The Motley Fool