IWO vs. VOOG: How Small-Cap Diversification Compares to Large-Cap Growth

Core Insights - The Vanguard S&P 500 Growth ETF (VOOG) and the iShares Russell 2000 Growth ETF (IWO) target growth stocks but differ in their focus on large-cap versus small-cap companies [1] Cost & Size - VOOG has an expense ratio of 0.07% and an AUM of $21.9 billion, while IWO has a higher expense ratio of 0.24% and an AUM of $12.2 billion [2] - As of March 26, 2026, VOOG's one-year return is 18.62% and IWO's is 19.81%, with VOOG offering a dividend yield of 0.50% compared to IWO's 0.54% [2] Performance & Risk Comparison - Over five years, VOOG has a maximum drawdown of -32.74% compared to IWO's -42.02%, indicating that VOOG has been less volatile [3] - A $1,000 investment in VOOG would have grown to $1,880 over five years, while the same investment in IWO would have grown to $1,127, highlighting VOOG's superior cumulative growth [3] Portfolio Composition - IWO tracks over 1,100 small-cap growth companies, with 24% of its assets in healthcare, followed by industrials and technology [4] - VOOG focuses on the S&P 500 growth segment, with 47% of its assets in technology and communication services, holding only 140 stocks [5] Investment Implications - IWO offers extensive diversification with lower concentration risk, while VOOG's focus on large-cap tech has led to higher returns [6] - VOOG's heavy reliance on mega-cap tech stocks could pose risks during tech sector volatility, as its top three holdings account for over 30% of its assets [7] - IWO's top three stocks make up less than 5% of its assets, providing a buffer against tech sector downturns [8]