The Vanguard S&P 500 Growth ETF is up more than 18% year to date and shows no signs of slowing.
Exchange-traded funds (ETFs) are a simple, hassle-free way to invest in a variety of companies. Many low-cost Vanguard index funds mirror the performance of major benchmarks, such as: S&P 500 And that Nasdaq Composite Index –Diversification and broad market exposure. However, some Vanguard funds have lower fees and other features that give them an edge over others.
of Vanguard S&P 500 Growth ETF (Vogue -0.14%) It has crushed the performance of the S&P 500 and the Nasdaq Composite this year. And best of all, the fund has an expense ratio of 0.10%, which means if you invest $1,000 in the fund, you’ll pay just $1 in annual fees.
Here’s how this fund compares to other Vanguard ETFs and why now is a good time to buy.
Image source: Getty Images.
A market that drives growth
Even if you’ve been loosely following market trends over the past few years, you’ve probably noticed mega-cap growth companies like: NVIDIA and Meta Platform It has led major stock indexes to new highs. On June 5, Nvidia apple It is known as the second most valuable company in the world. Sectors and funds that invest in these types of stocks have performed quite well so far this year.
of Vanguard Growth ETF (V.U.G. -0.10%) It’s one of Vanguard’s most popular funds, with net assets of $220 billion and an expense ratio of just 0.04%. Vanguard Mega Cap Growth ETF (MGK 0.01%) It has just $18 billion in net assets and a modest expense ratio of 0.06%, but it’s underwhelming the benchmark thanks to its high exposure to large growth stocks.
The Vanguard S&P 500 Growth ETF is even smaller, with net assets of just $10 billion.But so far this year it has outperformed 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 MicrosoftApple, NVIDIA, Amazon, alphabetMetaPlatform, etc. But what’s interesting is that the Vanguard S&P 500 Growth ETF includes some important stocks that aren’t included in the other two ETFs. Most notably: BroadcomIt is the eighth-largest holding in the Vanguard S&P 500 Growth ETF.
Oracle, UnitedHealth Groupand Procter & Gamble It also includes some of the top 20 stocks not included in the other two ETFs, including some of the industry’s leading dividend stocks. Home Depot I invested in the Vanguard S&P 500 Growth ETF and did not invest in the other two ETFs.
When weighing the pros and cons of the various Vanguard ETFs, it’s important to understand how Vanguard constructs its fund portfolios and how its strategies affect the holdings of other funds. For example, Vanguard Value ETF (VTV -0.16%) In many ways, it is a counterpart to the Vanguard Growth ETF. Broadcom, UnitedHealth, Procter & Gamble, and Home Depot are all in the fund’s top 10 holdings, although Microsoft, Apple, Nvidia, Alphabet, Amazon, and Meta Platforms are excluded. Tesla.
Meanwhile, the Mega-Cap Growth ETF is highly concentrated in top ideas: It holds just 79 stocks, compared to 229 for the Vanguard S&P 500 Growth ETF.
Big bets on a few sectors
The Vanguard S&P 500 Growth ETF can be thought of as the Vanguard Growth ETF plus the key holdings of the Vanguard Value ETF. Below is a comparison with the Vanguard S&P 500 Growth ETF. Vanguard S&P 500 ETF (VOO -0.13%)
|
sector |
Vanguard S&P 500 Growth ETF |
Vanguard S&P 500 ETF |
|---|---|---|
|
information technology |
46.8% |
29.2% |
|
Consumer discretionary goods |
14.4% |
10.3% |
|
Communication Services |
13% |
9.1% |
|
health care |
7.4% |
12.3% |
|
industry |
6.5% |
8.8% |
|
Finance |
5.1% |
13.1% |
|
Daily necessities |
2.8% |
6.2% |
|
energy |
1.8% |
4.1% |
|
material |
1.4% |
2.4% |
|
real estate |
0.7% |
2.2% |
|
utility |
0.1% |
2.3% |
Data source: Vanguard.
As the table shows, the Vanguard S&P 500 Growth ETF is heavily weighted to three sectors, with lower exposure to consumer staples, energy, financials, healthcare, industrials, materials, real estate, and utilities than the S&P 500. But it doesn’t completely ignore solid dividend-paying companies like some of the more aggressive growth funds do.
As mentioned above, the Vanguard S&P 500 Growth ETF holds Procter & Gamble, UnitedHealth, and Home Depot, which are Dow Jones Industrial Average Reward shareholders through share buybacks, increasing dividends, and organic growth.
The Vanguard S&P 500 Growth ETF’s largest oil and gas holdings are: ExxonMobil or Chevronbut exploration and production companies ConocoPhillipThis is an ETF that focuses on the upstream side of the industry, rather than refining, marketing, or other parts 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 also a more well-rounded choice than the Vanguard Growth ETF or Vanguard Mega Cap Growth ETF.
A winning formula
If there’s one word that has defined the stock market winners of last year and this year, it’s quality. Investors have poured money into companies with industry-leading positions, strong balance sheets and clear paths to sustained growth, and have shied away from smaller companies where uncertainty is high, even though many of them are extremely cheap.
So far this year, the Vanguard S&P 500 Growth ETF has outperformed other top growth-oriented ETFs and major indexes thanks to its recognition of quality across sectors. Its combination of focusing on top growth stocks and the fastest growing sectors of the market while also incorporating more staid industry leaders in slower growing sectors has been highly effective so far this year.
Overall, this ETF has the necessary structure to outperform the S&P 500 over the long term without charging exorbitant fees. Investors looking for a faster-growing, higher-quality basket of S&P 500 stocks without sacrificing value may want to consider the Vanguard S&P 500 Growth ETF over other Vanguard funds.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and public relations at Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Daniel Folber has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet, Amazon, Apple, Chevron, Home Depot, Meta Platforms, Microsoft, NVIDIA, Oracle, Tesla, Vanguard Index Fund, Vanguard Growth ETF, Vanguard Index Fund, Vanguard Value ETF, and Vanguard S&P 500 ETF. The Motley Fool recommends Broadcom and UnitedHealth Group and recommends long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
