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S&P 500 Stability vs. Superior Growth: Is VOO or VUG the Better ETF for You?
The Motley Fool· 2025-12-01 21:30
Core Insights - The Vanguard Growth ETF (VUG) focuses on tech-heavy growth stocks with higher recent returns, while the Vanguard S&P 500 ETF (VOO) offers broader diversification, lower risk, and a larger dividend payout [1][7]. Cost and Size Comparison - VUG has an expense ratio of 0.04% and assets under management (AUM) of $204.7 billion, while VOO has a lower expense ratio of 0.03% and AUM of $800.2 billion [3]. - VUG's one-year return is 20.0%, compared to VOO's 13.5%, and VOO provides a higher dividend yield of 1.15% versus VUG's 0.43% [3]. Performance and Risk Analysis - Over five years, VUG has a maximum drawdown of -35.61%, while VOO's is -24.53% [4]. - A $1,000 investment in VUG would grow to $2,008 over five years, compared to $1,880 for VOO [4]. Portfolio Composition - VOO holds 504 stocks, with 36% in technology, 13% in financial services, and 11% in consumer cyclicals, providing a diversified risk profile [5]. - VUG allocates 52% to technology, with significant portions in communication services and consumer cyclicals, leading to higher potential volatility [6]. Investment Strategy - VOO is a broad-market fund tracking the S&P 500, suitable for investors seeking stability and average returns [8][10]. - VUG targets above-average growth stocks, historically achieving higher returns but with increased volatility and risk [9][10].