The Vanguard Growth Index Fund ETF Shares (VUG) and the Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and VOE is a Vanguard Mid-Cap Value fund. So, what’s the difference between VUG and VOE? And which fund is better?
The expense ratio of VUG is 0.03 percentage points lower than VOE’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 VOE over the past ten years.
In this article, we’ll compare VUG vs. VOE. We’ll look at annual returns and portfolio growth, as well as at their risk metrics and industry exposure. Moreover, I’ll also discuss VUG’s and VOE’s fund composition, performance, and holdings and examine how these affect their overall returns.
|Name||Vanguard Growth Index Fund ETF Shares||Vanguard Mid-Cap Value Index Fund ETF Shares|
|Category||Large Growth||Mid-Cap Value|
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 Mid-Cap Value Index Fund ETF Shares (VOE) is a Mid-Cap Value fund that is issued by Vanguard. It currently has 26.78B total assets under management and has yielded an average annual return of 12.52% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.07%.
VUG’s dividend yield is 1.30% lower than that of VOE (0.57% vs. 1.87%). Also, VUG yielded on average 5.05% more per year over the past decade (17.58% vs. 12.52%). The expense ratio of VUG is 0.03 percentage points lower than VOE’s (0.04% vs. 0.07%).
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).
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 Mid-Cap Value Index Fund ETF Shares (VOE) has the most exposure to the Financial Services sector at 18.26%. This is followed by Consumer Cyclical and Real Estate at 11.8% and 11.48% respectively. Communication Services (5.27%), Basic Materials (5.44%), and Energy (5.69%) only make up 16.40% of the fund’s total assets.
VOE’s mid-section with moderate exposure is comprised of Healthcare, Industrials, Technology, Utilities, and Real Estate stocks at 7.04%, 9.4%, 9.85%, 10.93%, and 11.48%.
VUG is 29.20% more exposed to the Technology sector than VOE (39.05% vs 9.85%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 5.98% higher and 11.22% higher respectively (17.78% vs. 11.8% and 16.49% vs. 5.27%). In total, Energy, Basic Materials, and Consumer Defensive also make up 11.73% less of the fund’s holdings compared to VOE (4.25% vs. 15.98%).
|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%.
|Carrier Global Corp Ordinary Shares||1.28%|
|International Flavors & Fragrances Inc||1.13%|
|Motorola Solutions Inc||1.12%|
|Discover Financial Services||1.09%|
|Valero Energy Corp||0.97%|
|Willis Towers Watson PLC||0.9%|
|D.R. Horton Inc||0.89%|
VOE’s Top Holdings are Carrier Global Corp Ordinary Shares, International Flavors & Fragrances Inc, Motorola Solutions Inc, Discover Financial Services, and Welltower Inc at 1.28%, 1.13%, 1.12%, 1.09%, and 1.05%.
Corteva Inc (0.99%), Valero Energy Corp (0.97%), and Corning Inc (0.95%) have a slightly smaller but still significant weight. Willis Towers Watson PLC and D.R. Horton Inc are also represented in the VOE’s holdings at 0.9% and 0.89%.
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).
The Vanguard Growth Index Fund ETF Shares (VUG) has a Alpha of 1.81 with a R-squared of 92.48 and a Beta of 1.04. Its Standard Deviation is 14.76 while VUG’s Treynor Ratio is 16.13. Furthermore, the fund has a Sharpe Ratio of 1.13 and a Mean Return of 1.44.
The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a R-squared of 88.76 with a Standard Deviation of 15.98 and a Mean Return of 1.05. Its Sharpe Ratio is 0.75 while VOE’s Treynor Ratio is 10.19. Furthermore, the fund has a Beta of 1.11 and a Alpha of -3.77.
VUG’s Mean Return is 0.39 points higher than that of VOE and its R-squared is 3.72 points higher. With a Standard Deviation of 14.76, VUG is slightly less volatile than VOE. The Alpha and Beta of VUG are 5.58 points higher and 0.07 points lower than VOE’s Alpha and Beta.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
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 VOE, returning 37.65% on an annual basis. The poorest year for VOE in the last ten years was 2018, with a yield of -12.41%. Most years the Vanguard Mid-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 13.98%, 15.26%, and 16.04% 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 VOE, the end total would have been $33,655. This equates to a $23,655 profit over 11 years and a compound annual growth rate (CAGR) of 12.52%.
VUG’s CAGR is 5.05 percentage points higher than that of VOE and as a result, would have yielded $21,080 more on a $10,000 investment. Thus, VUG outperformed VOE by 5.05% 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.