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VUG vs. RSP: How Tech-Heavy Growth Compares to Balanced S&P 500 Diversification
The Motley Fool· 2026-01-17 19:30
Core Insights - The Vanguard Growth ETF (VUG) focuses on large-cap U.S. growth stocks, primarily in technology, while the Invesco S&P 500 Equal Weight ETF (RSP) provides equal weighting to all S&P 500 companies, resulting in a more balanced sector exposure [1][2] Cost & Size Comparison - VUG has a lower expense ratio of 0.04% compared to RSP's 0.20%, making it attractive for cost-conscious investors [3] - VUG's one-year return is 21.14%, significantly higher than RSP's 13.23%, while VUG's assets under management (AUM) stand at $352 billion versus RSP's $76 billion [3] - RSP offers a higher dividend yield of 1.64% compared to VUG's 0.41%, appealing to income-focused investors [3] Performance & Risk Analysis - Over five years, VUG has a max drawdown of -35.61%, while RSP's is -21.39%, indicating VUG's higher volatility [4] - A $1,000 investment in VUG would grow to $1,934 over five years, compared to $1,501 for RSP, showcasing VUG's superior growth potential [4] Portfolio Composition - RSP holds 504 stocks with a more diversified allocation, where technology comprises 16% of total assets, while VUG holds only 160 stocks with 51% in technology [5][6] - The top three holdings in RSP account for less than 1% of its portfolio, contrasting with VUG's top three holdings, which make up over 32% of its assets, indicating a higher concentration risk for VUG [6][8] Investor Implications - RSP's diversified approach may appeal to conservative investors, while VUG's tech-heavy focus may attract those seeking higher returns despite increased risk [7][10] - The choice between VUG and RSP depends on individual investment goals, with VUG offering higher potential returns at the cost of greater volatility, and RSP providing stability with limited growth potential [9][10]