VOO vs. VOOG: Choosing the Right ETF for Your Investment Strategy
When it comes to investing in the U .S . stock market two popular options are Vanguard’s VOO and VOOG ETFs . While both track different indexes within the S&P 500 they offer distinct investment opportunities . VOO provides broad exposure to the U .S . stock market while VOOG focuses on growth stocks within the S&P 500 . Understanding the differences between VOO vs VOOG is important when deciding on the one that aligns more with your investment goals .
VOO: Broad Exposure to the U .S . Stock Market
VOO or the Vanguard S&P 500 ETF is designed for investors who are looking for diversified exposure to the U .S . stock market . It tracks the S&P 500 index which includes 507 large-cap value stocks from the largest U .S . companies based on market capitalization . With total net assets of $856 .1 billion as of 12/31/21 VOO is one of the largest ETFs available .
Key Features of VOO
VOO consists of large-cap value stocks from numerous sectors like technology, healthcare, communication services and finance . With 507 companies in its holdings it gives investors exposure to leading global companies like Apple, Google, Microsoft, JPMorgan Chase & Co . and Berkshire Hathaway . The volatility rating of VOO is 21 .32% which shows a reasonably steady fund . The expense ratio for VOO is a low 0 .03% . VOO has experienced drawdowns in the past with the highest one occurring on March 22, 2020, at 33 .99% . However it recovered within 97 trading sessions . Historically VOO has spawned relatively stable returns in line with the average returns of the S&P 500 which is around 10% per year . Over the past decade VOO has shown major growth with a total return of around 397 .76% for investors who held $10,000 in the fund since 2010 . There are no fees when investing in VOO.
VOOG: Focus on Growth Stocks within the S&P 500
VOOG which stands for the Vanguard S&P 500 Growth Index Fund ETF is for investors who are looking for exposure to growth stocks within the S&P 500 . It tracks the S&P 500 Growth Index which consists of 304 growth stocks from growth companies in the S&P 500 . As of December 2021 VOOG had total net assets of $8 billion .
Key Features of VOOG
VOOG focuses on growth stocks in sectors like communications services, consumer discretionary and information technology . With 304 companies in its holdings VOOG provides exposure to leading growth companies like Apple, Microsoft, Amazon and Netflix . VOOG has also gone through declines in the past with the highest one happening on March 22, 2020 at 31 .41% . It recovered within 55 trading sessions . The expense ratio for VOOG is 0 .10% with no investment minimum . VOOG has a slightly higher volatility rating compared to VOO at 29 .40% . Over the past decade VOOG has shown strong growth with a total return of approximately 517 .97% for investors who held $10,000 in the fund since 2010 .
Choosing Between VOO and VOOG: Risk vs .
Deciding between VOO and VOOG ultimately depends on your risk tolerance and desired investment outcomes .
Investors who go for VOO will benefit from:
Broad exposure to the U .S . stock market through large-cap value stocks .
Relatively stable returns in line with the overall performance of the S&P 500 .
Lower volatility compared to VOOG .
Long-term value and average returns .
Investors considering VOOG will gain:
Exposure to growth stocks within the S&P 500 .
Potential for above-average returns and faster growth .
Higher volatility reflecting the nature of growth stocks .
Opportunities for capitalizing on emerging trends and innovation .
Both VOO and VOOG have performed well over the past decade and have low expense ratios which makes them attractive options for investors . In the end your decision should match your investment strategy .