The Vanguard Growth Index Fund ETF Shares (VUG) and the Vanguard Small-Cap Index Fund ETF Shares (VB) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and VB is a Vanguard Small Blend fund. So, what’s the difference between VUG and VB? And which fund is better?
The expense ratio of VUG is 0.01 percentage points lower than VB’s (0.04% vs. 0.05%). VUG also has a higher exposure to the technology sector and a lower standard deviation. Overall, VUG has provided higher returns than VB over the past ten years.
In this article, we’ll compare VUG vs. VB. We’ll look at holdings and performance, as well as at their portfolio growth and fund composition. Moreover, I’ll also discuss VUG’s and VB’s annual returns, industry exposure, and risk metrics and examine how these affect their overall returns.
|Name||Vanguard Growth Index Fund ETF Shares||Vanguard Small-Cap Index Fund ETF Shares|
|Category||Large Growth||Small Blend|
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 Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.05%.
VUG’s dividend yield is 0.57% lower than that of VB (0.57% vs. 1.14%). Also, VUG yielded on average 3.32% more per year over the past decade (17.58% vs. 14.25%). The expense ratio of VUG is 0.01 percentage points lower than VB’s (0.04% vs. 0.05%).
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 Vanguard Small-Cap Index Fund ETF Shares (VB) has the most exposure to the Technology sector at 16.85%. This is followed by Industrials and Healthcare at 16.11% and 14.34% respectively. Communication Services (2.4%), Energy (3.67%), and Consumer Defensive (4.14%) only make up 10.21% of the fund’s total assets.
VB’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Healthcare stocks at 4.63%, 9.56%, 13.03%, 13.06%, and 14.34%.
VUG is 22.20% more exposed to the Technology sector than VB (39.05% vs 16.85%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 4.75% higher and 14.09% higher respectively (17.78% vs. 13.03% and 16.49% vs. 2.4%). In total, Energy, Basic Materials, and Consumer Defensive also make up 8.19% less of the fund’s holdings compared to VB (4.25% vs. 12.44%).
|Facebook Inc Class A||3.89%|
|Alphabet Inc Class A||3.43%|
|Alphabet Inc Class C||3.22%|
|Visa Inc Class A||1.78%|
|PayPal Holdings Inc||1.6%|
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%.
|Charles River Laboratories International Inc||0.34%|
|Diamondback Energy Inc||0.31%|
|VICI Properties Inc Ordinary Shares||0.3%|
VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.
Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.
The Vanguard Growth Index Fund ETF Shares (VUG) has a Sharpe Ratio of 1.13 with a Alpha of 1.81 and a Standard Deviation of 14.76. Its Mean Return is 1.44 while VUG’s Treynor Ratio is 16.13. Furthermore, the fund has a R-squared of 92.48 and a Beta of 1.04.
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a R-squared of 85.03 with a Alpha of -4.02 and a Beta of 1.21. Its Mean Return is 1.15 while VB’s Treynor Ratio is 10.15. Furthermore, the fund has a Standard Deviation of 17.82 and a Sharpe Ratio of 0.74.
VUG’s Mean Return is 0.29 points higher than that of VB and its R-squared is 7.45 points higher. With a Standard Deviation of 14.76, VUG is slightly less volatile than VB. The Alpha and Beta of VUG are 5.83 points higher and 0.17 points lower than VB’s Alpha and Beta.
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 2013 was the strongest year for VB, returning 37.8% on an annual basis. The poorest year for VB in the last ten years was 2018, with a yield of -9.3%. Most years the Vanguard Small-Cap Index Fund ETF Shares has given investors modest returns, such as in 2017, 2012, and 2016, when gains were 16.24%, 18.22%, and 18.31% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VUG would have resulted in a final balance of $54,735. This is a profit of $44,735 over 11 years and amounts to a compound annual growth rate (CAGR) of 17.58%.
With a $10,000 investment in VB, the end total would have been $39,734. This equates to a $29,734 profit over 11 years and a compound annual growth rate (CAGR) of 14.25%.
VUG’s CAGR is 3.32 percentage points higher than that of VB and as a result, would have yielded $15,001 more on a $10,000 investment. Thus, VUG outperformed VB by 3.32% annually.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.