VUG vs. VIG: What’s The Difference?

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

The expense ratio of VUG is 0.02 percentage points lower than VIG’s (0.04% vs. 0.06%). VUG also has a higher exposure to the technology sector and a higher standard deviation. Overall, VUG has provided higher returns than VIG over the past ten years.

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

Summary

VUG VIG
Name Vanguard Growth Index Fund ETF Shares Vanguard Dividend Appreciation Index Fund ETF Shares
Category Large Growth Large Blend
Issuer Vanguard Vanguard
AUM 165.53B 71.92B
Avg. Return 17.58% 13.35%
Div. Yield 0.57% 1.56%
Expense Ratio 0.04% 0.06%

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 Dividend Appreciation Index Fund ETF Shares (VIG) is a Large Blend fund that is issued by Vanguard. It currently has 71.92B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.56% with an expense ratio of 0.06%.

VUG’s dividend yield is 0.99% lower than that of VIG (0.57% vs. 1.56%). Also, VUG yielded on average 4.23% more per year over the past decade (17.58% vs. 13.35%). The expense ratio of VUG is 0.02 percentage points lower than VIG’s (0.04% vs. 0.06%).

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Fund Composition

Industry Exposure

VUG vs. VIG - Industry Exposure

VUG VIG
Technology 39.05% 14.93%
Industrials 5.13% 17.23%
Energy 0.32% 0.0%
Communication Services 16.49% 2.86%
Utilities 0.0% 2.81%
Healthcare 8.09% 15.52%
Consumer Defensive 2.41% 15.32%
Real Estate 2.46% 0.0%
Financial Services 6.75% 17.18%
Consumer Cyclical 17.78% 10.47%
Basic Materials 1.52% 3.67%

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 Dividend Appreciation Index Fund ETF Shares (VIG) has the most exposure to the Industrials sector at 17.23%. This is followed by Financial Services and Healthcare at 17.18% and 15.52% respectively. Energy (0.0%), Utilities (2.81%), and Communication Services (2.86%) only make up 5.67% of the fund’s total assets.

VIG’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Cyclical, Technology, Consumer Defensive, and Healthcare stocks at 3.67%, 10.47%, 14.93%, 15.32%, and 15.52%.

VUG is 24.12% more exposed to the Technology sector than VIG (39.05% vs 14.93%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 7.31% higher and 13.63% higher respectively (17.78% vs. 10.47% and 16.49% vs. 2.86%). In total, Energy, Basic Materials, and Consumer Defensive also make up 14.74% less of the fund’s holdings compared to VIG (4.25% vs. 18.99%).

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%.

VIG - Holdings

VIG Holdings Weight
Microsoft Corp 4.19%
JPMorgan Chase & Co 3.8%
Johnson & Johnson 3.67%
Walmart Inc 3.38%
Visa Inc Class A 3.22%
UnitedHealth Group Inc 3.22%
The Home Depot Inc 2.91%
Procter & Gamble Co 2.82%
Comcast Corp Class A 2.21%
Coca-Cola Co 1.98%

VIG’s Top Holdings are Microsoft Corp, JPMorgan Chase & Co, Johnson & Johnson, Walmart Inc, and Visa Inc Class A at 4.19%, 3.8%, 3.67%, 3.38%, and 3.22%.

UnitedHealth Group Inc (3.22%), The Home Depot Inc (2.91%), and Procter & Gamble Co (2.82%) have a slightly smaller but still significant weight. Comcast Corp Class A and Coca-Cola Co are also represented in the VIG’s holdings at 2.21% and 1.98%.

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Risk Analysis

VUG VIG
Mean Return 1.44 1.09
R-squared 92.48 92.2
Std. Deviation 14.76 12.25
Alpha 1.81 0.12
Beta 1.04 0.86
Sharpe Ratio 1.13 1.01
Treynor Ratio 16.13 14.33

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

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Alpha of 0.12 with a Beta of 0.86 and a Mean Return of 1.09. Its Treynor Ratio is 14.33 while VIG’s Standard Deviation is 12.25. Furthermore, the fund has a R-squared of 92.2 and a Sharpe Ratio of 1.01.

VUG’s Mean Return is 0.35 points higher than that of VIG and its R-squared is 0.28 points higher. With a Standard Deviation of 14.76, VUG is slightly more volatile than VIG. The Alpha and Beta of VUG are 1.69 points higher and 0.18 points higher than VIG’s Alpha and Beta.

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Performance

Annual Returns

VUG vs. VIG - Annual Returns

Year VUG VIG
2020 40.16% 15.46%
2019 37.26% 29.71%
2018 -3.32% -2.02%
2017 27.8% 22.22%
2016 6.13% 11.84%
2015 3.32% -1.95%
2014 13.62% 10.06%
2013 32.38% 28.99%
2012 17.03% 11.61%
2011 1.87% 6.21%
2010 17.11% 14.67%

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 VIG, returning 29.71% on an annual basis. The poorest year for VIG in the last ten years was 2018, with a yield of -2.02%. Most years the Vanguard Dividend Appreciation Index Fund ETF Shares has given investors modest returns, such as in 2012, 2016, and 2010, when gains were 11.61%, 11.84%, and 14.67% respectively.

Portfolio Growth

VUG vs. VIG - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VUG $10,000 $54,735 17.58%
VIG $10,000 $37,951 13.35%

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 VIG, the end total would have been $37,951. This equates to a $27,951 profit over 11 years and a compound annual growth rate (CAGR) of 13.35%.

VUG’s CAGR is 4.23 percentage points higher than that of VIG and as a result, would have yielded $16,784 more on a $10,000 investment. Thus, VUG outperformed VIG by 4.23% annually.


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