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VUG vs. DGRO: What’s The Difference?

The Vanguard Growth Index Fund ETF Shares (VUG) and the iShares Core Dividend Growth ETF (DGRO) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and DGRO is a iShares Large Value fund. So, what’s the difference between VUG and DGRO? And which fund is better?

The expense ratio of VUG is 0.04 percentage points lower than DGRO’s (0.04% vs. 0.08%). VUG also has a higher exposure to the technology sector and a higher standard deviation. Overall, VUG has provided higher returns than DGRO over the past ten years.

In this article, we’ll compare VUG vs. DGRO. We’ll look at performance and annual returns, as well as at their portfolio growth and holdings. Moreover, I’ll also discuss VUG’s and DGRO’s industry exposure, fund composition, and risk metrics and examine how these affect their overall returns.

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Summary

VUGDGRO
NameVanguard Growth Index Fund ETF SharesiShares Core Dividend Growth ETF
CategoryLarge GrowthLarge Value
IssuerVanguardiShares
AUM165.53B20B
Avg. Return17.58%12.46%
Div. Yield0.57%2.04%
Expense Ratio0.04%0.08%

The Vanguard Growth Index Fund ETF Shares (VUG) is a Large Growth fund that is issued by Vanguard. It currently has 165.53B total assets under management and has yielded an average annual return of 17.58% over the past 10 years. The fund has a dividend yield of 0.57% with an expense ratio of 0.04%.

The iShares Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.

VUG’s dividend yield is 1.47% lower than that of DGRO (0.57% vs. 2.04%). Also, VUG yielded on average 5.12% more per year over the past decade (17.58% vs. 12.46%). The expense ratio of VUG is 0.04 percentage points lower than DGRO’s (0.04% vs. 0.08%).

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Fund Composition

Industry Exposure

VUG vs. DGRO - Industry Exposure

VUGDGRO
Technology39.05%18.98%
Industrials5.13%12.52%
Energy0.32%0.11%
Communication Services16.49%4.53%
Utilities0.0%7.34%
Healthcare8.09%17.55%
Consumer Defensive2.41%10.24%
Real Estate2.46%0.0%
Financial Services6.75%18.47%
Consumer Cyclical17.78%7.42%
Basic Materials1.52%2.83%

The Vanguard Growth Index Fund ETF Shares (VUG) has the most exposure to the Technology sector at 39.05%. This is followed by Consumer Cyclical and Communication Services at 17.78% and 16.49% respectively. Energy (0.32%), Basic Materials (1.52%), and Consumer Defensive (2.41%) only make up 4.25% of the fund’s total assets.

VUG’s mid-section with moderate exposure is comprised of Real Estate, Industrials, Financial Services, Healthcare, and Communication Services stocks at 2.46%, 5.13%, 6.75%, 8.09%, and 16.49%.

The iShares Core Dividend Growth ETF (DGRO) has the most exposure to the Technology sector at 18.98%. This is followed by Financial Services and Healthcare at 18.47% and 17.55% respectively. Energy (0.11%), Basic Materials (2.83%), and Communication Services (4.53%) only make up 7.47% of the fund’s total assets.

DGRO’s mid-section with moderate exposure is comprised of Utilities, Consumer Cyclical, Consumer Defensive, Industrials, and Healthcare stocks at 7.34%, 7.42%, 10.24%, 12.52%, and 17.55%.

VUG is 20.07% more exposed to the Technology sector than DGRO (39.05% vs 18.98%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 10.36% higher and 11.96% higher respectively (17.78% vs. 7.42% and 16.49% vs. 4.53%). In total, Energy, Basic Materials, and Consumer Defensive also make up 8.93% less of the fund’s holdings compared to DGRO (4.25% vs. 13.18%).

Holdings

VUG - Holdings

VUG HoldingsWeight
Apple Inc10.13%
Microsoft Corp9.52%
Amazon.com Inc6.88%
Facebook Inc Class A3.89%
Alphabet Inc Class A3.43%
Alphabet Inc Class C3.22%
Tesla Inc2.44%
NVIDIA Corp2.21%
Visa Inc Class A1.78%
PayPal Holdings Inc1.6%

VUG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.13%, 9.52%, 6.88%, 3.89%, and 3.43%.

Alphabet Inc Class C (3.22%), Tesla Inc (2.44%), and NVIDIA Corp (2.21%) have a slightly smaller but still significant weight. Visa Inc Class A and PayPal Holdings Inc are also represented in the VUG’s holdings at 1.78% and 1.6%.

DGRO - Holdings

DGRO HoldingsWeight
Microsoft Corp3.29%
Apple Inc3.26%
Pfizer Inc2.89%
Johnson & Johnson2.87%
Procter & Gamble Co2.79%
Verizon Communications Inc2.68%
JPMorgan Chase & Co2.57%
The Home Depot Inc2.35%
Merck & Co Inc2.11%
Cisco Systems Inc1.98%

DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.

Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.

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Risk Analysis

VUGDGRO
Mean Return1.440
R-squared92.480
Std. Deviation14.760
Alpha1.810
Beta1.040
Sharpe Ratio1.130
Treynor Ratio16.130

The Vanguard Growth Index Fund ETF Shares (VUG) has a Sharpe Ratio of 1.13 with a Beta of 1.04 and a Alpha of 1.81. Its Treynor Ratio is 16.13 while VUG’s R-squared is 92.48. Furthermore, the fund has a Standard Deviation of 14.76 and a Mean Return of 1.44.

The iShares Core Dividend Growth ETF (DGRO) has a Sharpe Ratio of 0 with a Standard Deviation of 0 and a Beta of 0. Its Mean Return is 0 while DGRO’s R-squared is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Alpha of 0.

VUG’s Mean Return is 1.44 points higher than that of DGRO and its R-squared is 92.48 points higher. With a Standard Deviation of 14.76, VUG is slightly more volatile than DGRO. The Alpha and Beta of VUG are 1.81 points higher and 1.04 points higher than DGRO’s Alpha and Beta.

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Performance

Annual Returns

VUG vs. DGRO - Annual Returns

YearVUGDGRO
202040.16%9.47%
201937.26%30.02%
2018-3.32%-2.24%
201727.8%22.84%
20166.13%15.27%
20153.32%-0.62%
201413.62%0.0%
201332.38%0.0%
201217.03%0.0%
20111.87%0.0%
201017.11%0.0%

VUG had its best year in 2020 with an annual return of 40.16%. VUG’s worst year over the past decade yielded -3.32% and occurred in 2018. In most years the Vanguard Growth Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 13.62%, 17.03%, and 17.11% respectively.

The year 2019 was the strongest year for DGRO, returning 30.02% on an annual basis. The poorest year for DGRO in the last ten years was 2018, with a yield of -2.24%. Most years the iShares Core Dividend Growth ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

VUG vs. DGRO - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VUG$10,000$26,06517.58%
DGRO$10,000$19,58012.46%

A $10,000 investment in VUG would have resulted in a final balance of $26,065. This is a profit of $16,065 over 6 years and amounts to a compound annual growth rate (CAGR) of 17.58%.

With a $10,000 investment in DGRO, the end total would have been $19,580. This equates to a $9,580 profit over 6 years and a compound annual growth rate (CAGR) of 12.46%.

VUG’s CAGR is 5.12 percentage points higher than that of DGRO and as a result, would have yielded $6,485 more on a $10,000 investment. Thus, VUG outperformed DGRO by 5.12% annually.


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