VUG vs. VGK: What’s The Difference?

The Vanguard Growth Index Fund ETF Shares (VUG) and the Vanguard FTSE Europe Index Fund ETF Shares (VGK) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and VGK is a Vanguard Europe Stock fund. So, what’s the difference between VUG and VGK? And which fund is better?

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

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

Summary

VUG VGK
Name Vanguard Growth Index Fund ETF Shares Vanguard FTSE Europe Index Fund ETF Shares
Category Large Growth Europe Stock
Issuer Vanguard Vanguard
AUM 165.53B 25.7B
Avg. Return 17.58% 6.68%
Div. Yield 0.57% 2.52%
Expense Ratio 0.04% 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 Vanguard FTSE Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% with an expense ratio of 0.08%.

VUG’s dividend yield is 1.95% lower than that of VGK (0.57% vs. 2.52%). Also, VUG yielded on average 10.90% more per year over the past decade (17.58% vs. 6.68%). The expense ratio of VUG is 0.04 percentage points lower than VGK’s (0.04% vs. 0.08%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

VUG vs. VGK - Industry Exposure

VUG VGK
Technology 39.05% 8.3%
Industrials 5.13% 15.58%
Energy 0.32% 4.3%
Communication Services 16.49% 5.09%
Utilities 0.0% 3.89%
Healthcare 8.09% 13.76%
Consumer Defensive 2.41% 11.39%
Real Estate 2.46% 2.57%
Financial Services 6.75% 15.85%
Consumer Cyclical 17.78% 11.6%
Basic Materials 1.52% 7.67%

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 FTSE Europe Index Fund ETF Shares (VGK) has the most exposure to the Financial Services sector at 15.85%. This is followed by Industrials and Healthcare at 15.58% and 13.76% respectively. Utilities (3.89%), Energy (4.3%), and Communication Services (5.09%) only make up 13.28% of the fund’s total assets.

VGK’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.67%, 8.3%, 11.39%, 11.6%, and 13.76%.

VUG is 30.75% more exposed to the Technology sector than VGK (39.05% vs 8.3%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 6.18% higher and 11.40% higher respectively (17.78% vs. 11.6% and 16.49% vs. 5.09%). In total, Energy, Basic Materials, and Consumer Defensive also make up 19.11% less of the fund’s holdings compared to VGK (4.25% vs. 23.36%).

Holdings

VUG - Holdings

VUG Holdings Weight
Apple Inc 10.13%
Microsoft Corp 9.52%
Amazon.com Inc 6.88%
Facebook Inc Class A 3.89%
Alphabet Inc Class A 3.43%
Alphabet Inc Class C 3.22%
Tesla Inc 2.44%
NVIDIA Corp 2.21%
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%.

VGK - Holdings

VGK Holdings Weight
Nestle SA 2.82%
ASML Holding NV 2.2%
Roche Holding AG 2.13%
LVMH Moet Hennessy Louis Vuitton SE 1.58%
Novartis AG 1.55%
AstraZeneca PLC 1.27%
SAP SE 1.25%
Unilever PLC 1.23%
Novo Nordisk A/S B 1.09%
Siemens AG 0.96%

VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.

AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

VUG VGK
Mean Return 1.44 0.61
R-squared 92.48 92.76
Std. Deviation 14.76 16.65
Alpha 1.81 0.45
Beta 1.04 1.06
Sharpe Ratio 1.13 0.4
Treynor Ratio 16.13 5.12

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

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Treynor Ratio of 5.12 with a Alpha of 0.45 and a R-squared of 92.76. Its Sharpe Ratio is 0.4 while VGK’s Standard Deviation is 16.65. Furthermore, the fund has a Beta of 1.06 and a Mean Return of 0.61.

VUG’s Mean Return is 0.83 points higher than that of VGK and its R-squared is 0.28 points lower. With a Standard Deviation of 14.76, VUG is slightly less volatile than VGK. The Alpha and Beta of VUG are 1.36 points higher and 0.02 points lower than VGK’s Alpha and Beta.

BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Gemini - the simplest and cheapest broker I've found! Click here to read more (link to Gemini).

Performance

Annual Returns

VUG vs. VGK - Annual Returns

Year VUG VGK
2020 40.16% 6.5%
2019 37.26% 24.26%
2018 -3.32% -14.79%
2017 27.8% 27.06%
2016 6.13% -0.59%
2015 3.32% -1.87%
2014 13.62% -6.56%
2013 32.38% 24.93%
2012 17.03% 21.01%
2011 1.87% -11.49%
2010 17.11% 5.01%

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 2017 was the strongest year for VGK, returning 27.06% on an annual basis. The poorest year for VGK in the last ten years was 2018, with a yield of -14.79%. Most years the Vanguard FTSE Europe Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were -0.59%, 5.01%, and 6.5% respectively.

Portfolio Growth

VUG vs. VGK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VUG $10,000 $54,735 17.58%
VGK $10,000 $18,350 6.68%

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 VGK, the end total would have been $18,350. This equates to a $8,350 profit over 11 years and a compound annual growth rate (CAGR) of 6.68%.

VUG’s CAGR is 10.90 percentage points higher than that of VGK and as a result, would have yielded $36,385 more on a $10,000 investment. Thus, VUG outperformed VGK by 10.90% annually.


Current recommendations:

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) 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!

2) 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!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply