The Vanguard Growth Index Fund ETF Shares (VUG) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between VUG and VBK? And which fund is better?
The expense ratio of VUG is 0.03 percentage points lower than VBK’s (0.04% vs. 0.07%). VUG also has a higher exposure to the technology sector and a lower standard deviation. Overall, VUG has provided higher returns than VBK over the past ten years.
In this article, we’ll compare VUG vs. VBK. We’ll look at portfolio growth and holdings, as well as at their performance and risk metrics. Moreover, I’ll also discuss VUG’s and VBK’s industry exposure, annual returns, and fund composition and examine how these affect their overall returns.
|Name||Vanguard Growth Index Fund ETF Shares||Vanguard Small-Cap Growth Index Fund ETF Shares|
|Category||Large Growth||Small Growth|
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 Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.
VUG’s dividend yield is 0.12% higher than that of VBK (0.57% vs. 0.45%). Also, VUG yielded on average 1.05% more per year over the past decade (17.58% vs. 16.53%). The expense ratio of VUG is 0.03 percentage points lower than VBK’s (0.04% vs. 0.07%).
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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 Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.
VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.
VUG is 11.18% more exposed to the Technology sector than VBK (39.05% vs 27.87%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 5.65% higher and 13.25% higher respectively (17.78% vs. 12.13% and 16.49% vs. 3.24%). In total, Energy, Basic Materials, and Consumer Defensive also make up 3.84% less of the fund’s holdings compared to VBK (4.25% vs. 8.09%).
|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||0.78%|
|Fair Isaac Corp||0.57%|
|Bill.com Holdings Inc Ordinary Shares||0.56%|
VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.
Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.
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The Vanguard Growth Index Fund ETF Shares (VUG) has a R-squared of 92.48 with a Standard Deviation of 14.76 and a Beta of 1.04. Its Sharpe Ratio is 1.13 while VUG’s Alpha is 1.81. Furthermore, the fund has a Treynor Ratio of 16.13 and a Mean Return of 1.44.
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Beta of 1.18 with a Mean Return of 1.22 and a R-squared of 80.56. Its Alpha is -2.81 while VBK’s Treynor Ratio is 11.18. Furthermore, the fund has a Sharpe Ratio of 0.78 and a Standard Deviation of 17.95.
VUG’s Mean Return is 0.22 points higher than that of VBK and its R-squared is 11.92 points higher. With a Standard Deviation of 14.76, VUG is slightly less volatile than VBK. The Alpha and Beta of VUG are 4.62 points higher and 0.14 points lower than VBK’s Alpha and Beta.
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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 VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% 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 VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.
VUG’s CAGR is 1.05 percentage points higher than that of VBK and as a result, would have yielded $6,096 more on a $10,000 investment. Thus, VUG outperformed VBK by 1.05% annually.
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