If you’re targeting growth, VOOG generally performs better than VOO by focusing on growth-oriented stocks, especially in technology, which has driven higher returns recently. VOOG delivered about 28.6% annual growth last year compared to 18.3% for VOO, but with increased volatility and risk. VOO offers broader diversification and lower costs, making it more stable. Understanding these differences helps you decide which ETF aligns with your growth goals and risk tolerance. More details clarify their unique characteristics.
Overview of VOO and VOOG
Although both VOO and VOOG are exchange-traded funds that track segments of the S&P 500, they serve different investment purposes.
VOO invests in 500 large U.S. companies, offering broad diversification across sectors with an expense ratio of 0.03%.
VOOG focuses specifically on growth stocks within the S&P 500 Growth Index, heavily weighted toward technology, with a higher expense ratio of 0.1%.
VOO’s assets under management total about $1.4 trillion, much larger than VOOG’s $20.7 billion.
This difference affects your exposure to growth stocks, technology concentration, and overall ETF performance potential.
Comparison of Historical Performance
When comparing the historical performance of VOO and VOOG, you’ll notice that VOOG has delivered higher returns over recent years but with increased volatility.
Over the past year, VOOG returned 28.6%, beating VOO’s 18.3%. A $1,000 investment in VOOG grew to about $2,200 in five years, while VOO reached roughly $2,083.
VOOG’s focus on growth assets leads to greater performance but also higher risk, shown by its larger max drawdown and standard deviation.
Despite this, VOOG’s Sharpe Ratio of 0.91 suggests slightly better risk-adjusted returns compared to VOO’s 0.89.
Risk and Volatility Analysis
Since risk and volatility are key factors in investment decisions, understanding how VOO and VOOG differ in these areas is essential.
VOO offers broader diversification and lower volatility, while VOOG targets growth stocks with higher risk and potential return.
Consider these points:
- VOO has a lower max drawdown (-34.0%) versus VOOG’s -32.7%, suggesting better loss protection.
- VOOG’s standard deviation is 18.9%, higher than VOO’s 17.2%, reflecting more volatility.
- VOOG’s Sharpe ratio (0.91) edges out VOO’s 0.89, showing slightly better risk-adjusted returns.
Investors prioritizing stability may prefer VOO; those seeking growth might choose VOOG despite increased risk.
Sector and Holdings Breakdown
Understanding the differences in sector allocation and individual holdings helps clarify why VOO and VOOG perform differently.
VOO holds 504 stocks, offering broad diversification with technology as its largest sector at 35%, alongside significant Financial Services and Consumer Discretionary.
VOOG focuses on 217 growth stocks, with higher sector concentration—technology represents 43%, and Communication Services and Consumer Discretionary are emphasized.
Both ETFs share top holdings like Nvidia, Microsoft, and Apple, but VOOG’s growth strategy results in heavier concentration, increasing price volatility and risk.
Choosing between them depends on your comfort with growth-focused exposure versus broader diversification.
Cost, Liquidity, and Investment Considerations
Although both VOO and VOOG offer exposure to U.S. equities, they differ greatly in cost, liquidity, and investment considerations.
You’ll find VOO’s expense ratio is lower at 0.03%, making it more cost-effective than VOOG’s 0.07%. VOO also boasts higher liquidity, supported by its $1.62 billion average daily trading volume and $325.71 billion assets under management, reflecting strong market confidence and a broad investor base.
In contrast, VOOG presents higher volatility with a max drawdown of -32.73%.
Consider these factors:
- Trading volume and bid-ask spreads
- Expense ratio and cost efficiency
- Volatility and max drawdown
- Assets under management and investor base
Frequently Asked Questions
What Is Better to Invest In, VOO or VOOG?
You’ll want to weigh VOOG’s higher growth potential and historical returns against VOO’s lower expense ratio and reduced volatility. Align your investment strategy with your risk tolerance and freedom goals, considering sector allocation and dividend differences.
Is VOOG Good for Long Term?
You’ll find VOOG’s long-term potential appealing, thanks to strong historical performance and low expense ratio. Just weigh market volatility and sector allocation risks carefully, aligning with your investment strategy and desire for portfolio diversification and freedom.
Which ETF Does Warren Buffett Recommend?
Warren Buffett recommends you choose low-cost index funds like VOO for long-term strategy, valuing diversification benefits, risk management, and steady market performance over stock selection, aligning with his investment philosophy and your freedom-focused investment goals.
Is VOO Considered a Growth ETF?
VOO isn’t strictly a growth ETF; it blends growth investing with diversification benefits. Its performance tracks broad index funds, balancing technology sector exposure and market trends for steady, long-term gains. It suits passive investing strategies.
