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 with exposure to these types of stocks have done pretty 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 industry-leading 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 only has 79 participations compared to 229 for the Vanguard…
