Growth Stocks or the Whole Market?

VOO, the Vanguard S&P 500 ETF, owns all of the roughly 500 large US companies in the S&P 500. VUG, the Vanguard Morningstar Growth ETF, owns only the large US companies classed as growth stocks, a much smaller group of fast-growing businesses dominated by technology.

That makes VUG a concentrated slice of the market and VOO the broad core of it. VUG has delivered higher returns over much of the past two decades, but with deeper falls when growth stocks fall out of favour. VOO is more balanced, pays a higher dividend and spreads its risk across every sector of the economy.

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This guide is part of FRC’s complete step-by-step guide to investing in ETFs. It compares VUG and VOO on what they hold, how they have performed, the risks they carry and how they fit together, so you can decide which suits your plans.

VUG and VOO at a Glance

VOO tracks the S&P 500, the best-known measure of large US companies. It launched in September 2010 and has become one of the largest ETFs in the world. It holds companies from every sector, from technology and healthcare to banks, energy and consumer staples.

VUG tracks a large-cap growth index that picks out the growth half of the large US company market. It launched in January 2004. Its index was known as the CRSP US Large Cap Growth Index until Morningstar rebranded the CRSP indexes in 2026, when Vanguard renamed the fund the Vanguard Morningstar Growth ETF; the ticker and the way it is managed did not change.

VOO holds around 500 stocks, while VUG holds a much smaller number, typically somewhere between about 150 and 200. Both are passively managed, both are among the cheapest ETFs available, and both pay dividends quarterly.

The core difference is breadth. VOO gives you the whole large-cap market, growth and value companies together. VUG gives you only the growth side, which means more technology, more concentration and a bigger bet on a handful of companies.

What VOO Holds

VOO owns every company in the S&P 500, weighted by market value. The largest companies, such as Nvidia, Microsoft, Apple, Amazon, Alphabet, Meta and Broadcom, have the biggest influence, but hundreds of other companies across every sector make up the rest.

That breadth includes plenty of companies that are not classed as growth stocks: banks, insurers, oil companies, utilities, food and drink makers, and healthcare businesses. These companies tend to grow more slowly but often pay higher dividends and hold up better when fast-growing stocks fall.

Even so, VOO is more concentrated than it used to be. The ten largest companies now make up well over a third of the index. FRC’s guides to SPY vs VOO and VOO vs VTI vs QQQ explain how VOO compares with other popular funds.

What VUG Holds

VUG holds the same giant technology and growth companies at the top of VOO, but in much larger proportions. In VUG, the ten largest holdings make up more than half of the fund, so the fortunes of a few companies drive most of its returns.

Technology is by far its largest sector, often around half of the fund, with consumer companies such as Amazon and Tesla and communication companies such as Alphabet and Meta making up much of the rest. Banks, energy companies, utilities and consumer staples barely feature.

The index decides which companies count as growth by scoring them on measures such as past and expected earnings growth, sales growth and return on assets. Companies scoring highly on growth go into the growth index, those scoring low go into the matching value index, and some companies in between are split across both.

Don’t start investing and then start learning how investing works. ETF Investing for Beginners explains how index funds are built, what you actually own and how to read a fund’s holdings before you invest.

How Much Do VUG and VOO Overlap?

A lot. Almost every company in VUG is also in VOO, because the largest growth companies are also among the largest companies in the S&P 500. By value, a very large share of VUG’s money sits in the same companies as VOO’s biggest holdings.

The difference is in the weighting. VOO might hold a few percent in each of its largest companies, while VUG holds roughly twice as much of each. Owning VUG is a bit like owning VOO with its slower-growing companies removed and the money put into the fastest growers.

That means owning both does not add much diversification. It mostly increases your exposure to the same large technology companies. FRC’s guide on how to check ETF overlap explains how to see how much two funds repeat each other.

How They Have Performed

Over much of the period since the global financial crisis, VUG has beaten VOO, sometimes by a wide margin. In the ten years to 2026, VUG returned roughly two percentage points a year more than VOO, a gap that compounds into a large difference over a decade. The rise of the giant technology companies, falling interest rates for much of that time, and the shift of the economy towards software and digital services all favoured growth stocks.

It has not been a straight line. In 2022, as interest rates rose sharply, VUG fell by around a third, while VOO fell by less than a fifth. Growth stocks are valued on profits expected far in the future, so rising interest rates hit them harder, much as long-term bonds suffer most when rates rise.

History before VUG’s launch shows the same pattern on a bigger scale. When the dot-com bubble burst in 2000, large growth stocks fell far more than the broad market and took many years to recover. Value stocks beat growth stocks for much of the early 2000s.

Leadership between growth and value has rotated many times, and nobody has been able to predict reliably when it will change. FRC’s guide on the dangers of chasing the best-performing ETFs explains why buying a fund for its recent record so often disappoints.

The market doesn’t care whether you understand the risks. It will expose you to them regardless. ETF Investing Strategies shows you how to build an allocation around your goals rather than around whichever style did best last year.

Risk and Volatility

VUG is the more volatile of the two. Because it is concentrated in fewer companies and one sector, its price swings are larger in both directions. When technology stocks rally, VUG usually rises faster than VOO; when they fall, it usually falls further.

Beta measures this. VOO has a beta of about 1, meaning it moves in line with the market, because it largely is the market. VUG’s beta has typically been around 1.2, meaning it has tended to move about 20% more than the market in either direction.

Concentration is the main risk. If a few of VUG’s largest companies stumble at the same time, perhaps because of regulation, competition or a change in investor sentiment, there are few other holdings to cushion the fall. VOO has hundreds of companies in other sectors that can help steady it.

Valuation adds another layer. Growth stocks usually trade at higher prices relative to their earnings, because investors expect strong growth to continue. If that growth disappoints, prices can fall sharply even if the companies remain profitable.

Neither fund is suitable for money you may need in the next few years. Both are all-stock funds and can fall heavily in a crash. FRC’s guide on what happens to your ETF during a stock market crash explains what to expect.

Dividends

VOO pays a noticeably higher dividend yield than VUG, typically more than twice as much. Its slower-growing companies, such as banks, energy and consumer staples businesses, tend to pay out more of their profits as dividends.

Growth companies usually reinvest most of their profits to keep growing, or buy back shares, so VUG’s yield is low. For investors who want income from their portfolio, VUG is not designed to provide it.

That does not make VUG worse for long-term investors who do not need income. A lower yield simply means more of the return comes from price growth rather than payouts. FRC’s guide to growth vs dividend ETFs explains how the two approaches can work together.

Costs and Tax

Both funds are extremely cheap, with expense ratios of a few hundredths of one percent a year, which works out at only a few dollars a year on a $10,000 investment. Any difference in cost between them is negligible, so cost should not decide the choice. Fees change from time to time, so check the current figure on each fund’s fact sheet.

Both are very tax-efficient. Vanguard’s ETFs rarely distribute capital gains, and almost all of the dividends from both funds are qualified dividends, taxed at the lower long-term capital gains rates if you meet the holding period. VUG’s lower yield means a smaller annual tax bill on dividends in a taxable account.

FRC’s guides on how ETFs are taxed in the United States and how ETF fees affect your investment returns explain the details.

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Growth vs Value: The Other Half of the Market

Every large-cap growth fund has a matching value fund. Vanguard’s value counterpart to VUG is the Vanguard Morningstar Value ETF, VTV, which holds the slower-growing, cheaper and often higher-dividend half of the large-cap market.

Owning VUG and VTV together in proportion gives you something close to the whole large-cap market, much like VOO. Owning VUG alone is a deliberate tilt towards growth; owning VTV alone is a tilt towards value.

Investors who want to tilt towards growth often keep a broad fund like VOO as their core and add a smaller position in VUG on top. That keeps the bulk of the portfolio diversified while increasing exposure to the companies they believe will grow fastest.

A split of 80% VOO and 20% VUG, for example, keeps the portfolio anchored to the whole market while noticeably raising its weight in the largest technology companies. Anyone using both should check their combined exposure from time to time, so that growth and technology do not quietly come to dominate their whole portfolio.

What “Growth” Really Means

The word “growth” is one of the most misunderstood labels in investing. It describes the companies a fund holds, not how much the fund is expected to grow. A growth fund holds companies whose earnings and sales have been growing fast and are expected to keep doing so.

That fast growth is usually already reflected in their share prices. Investors pay more for each dollar of a growth company’s earnings, so the company has to deliver on high expectations just to justify its price. When it does, the shares can do very well; when it falls short, they can fall hard.

Value companies are the opposite: slower-growing businesses that trade at lower prices relative to their earnings. Long-term academic research has found that value stocks have outperformed growth stocks over many decades, even though growth has led for much of the period since the global financial crisis. Neither style wins every decade.

VUG vs VOOG: Two Ways to Own Growth

Vanguard offers a second large-cap growth ETF, VOOG, the Vanguard S&P 500 Growth ETF. Instead of the Morningstar growth index, it tracks the S&P 500 Growth Index, which picks the growth companies from within the S&P 500 using S&P’s own scoring rules.

The two funds hold many of the same companies, but VUG is generally more concentrated in the very largest growth stocks and has been the cheaper of the two. VOOG holds more companies, because S&P’s method places a larger share of the S&P 500 in its growth index. For most investors, the bigger decision remains whether to tilt towards growth at all.

VUG vs VOO vs QQQ

VUG is often compared with QQQ, which tracks the Nasdaq-100. Both are heavy in technology and the same giant companies, and both have had similar patterns of strong gains and sharp falls.

The differences are in the rules. QQQ holds the 100 largest non-financial companies listed on the Nasdaq, regardless of whether they are classed as growth or value, while VUG picks growth companies from the whole US market, including those listed on the New York Stock Exchange. VUG has also been considerably cheaper than QQQ.

Sector funds such as VGT, the Vanguard Information Technology ETF, go further still, holding only technology companies. They are even more concentrated than VUG and carry correspondingly more risk.

For most investors the choice between VUG, QQQ and similar funds matters less than the choice between a growth-tilted fund and a broad market fund like VOO. That decision shapes how much risk you are taking far more than which growth fund you use.

Which One Fits Your Portfolio?

VOO suits investors who want one simple, low-cost core holding that represents the US large-cap market as a whole. It is broad enough to be the main stock fund in a long-term portfolio.

VUG suits investors with a long time horizon who are comfortable with bigger swings and want more exposure to fast-growing companies. It works best as a deliberate tilt alongside a broader fund, rather than as the only fund in a portfolio.

Younger investors with decades ahead of them can generally tolerate VUG’s volatility better than those close to retirement. But time horizon is only part of it: how you will feel, and what you will do, if VUG falls by a third in a year matters just as much.

FRC’s guides to the three-fund portfolio and core and satellite ETF portfolios show how a broad core fund and a smaller tilt can work together.

Common Mistakes With VUG and VOO

Assuming past outperformance will continue. VUG’s strong record reflects a particular period that favoured growth stocks. There have been long periods when value stocks and the broad market did better.

Thinking two funds means double the diversification. VUG and VOO hold many of the same companies, so owning both mostly increases your exposure to the largest technology stocks.

Underestimating how deep the falls can be. A fund that falls by a third in a year tests every investor’s nerve. Selling after a fall locks in the loss just before a possible recovery.

Using VUG for income. VUG’s low yield makes it a poor choice for investors who need regular income from their portfolio.

Your portfolio deserves an educated investor. FRC’s three progressive ETF programmes, from ETF Investing for Beginners to Advanced ETF Investing, teach you to judge a fund by what it holds, what it costs and the role it plays in your portfolio.

Common Questions

What is the difference between VUG and VOO? VOO holds all of the roughly 500 companies in the S&P 500, while VUG holds only the large US companies classed as growth stocks. VUG is more concentrated in technology, more volatile and pays a lower dividend.

Is VUG better than VOO? VUG has delivered higher returns over much of the past two decades, but it has also suffered deeper falls, such as in 2022. Neither is better in every period; VOO is broader and steadier, while VUG is a bet on growth stocks.

Do VUG and VOO overlap? Yes, heavily. Almost every company in VUG is also in VOO, and the largest holdings of both are the same giant technology and growth companies.

Should I own both VUG and VOO? You can, but owning both mostly increases your exposure to the same large technology companies. Many investors use VOO as their core holding and add a smaller amount of VUG only if they deliberately want a growth tilt.

Which pays more dividends, VUG or VOO? VOO pays a noticeably higher dividend yield, typically more than twice VUG’s, because it includes slower-growing companies that pay out more of their profits.

Is VUG riskier than VOO? Yes. VUG is concentrated in fewer companies and in the technology sector, so its price swings are larger. In 2022 it fell by around a third, compared with less than a fifth for VOO.

Has VUG changed its name? Yes. In 2026, Vanguard added Morningstar to the names of its US equity index funds after Morningstar rebranded the CRSP indexes, so VUG is now the Vanguard Morningstar Growth ETF. The ticker and the way the fund is managed stayed the same.

Is VUG good for long-term investing? VUG can suit long-term investors who are comfortable with large swings, but its concentration means it works best alongside a broader fund rather than on its own.

What is the difference between VUG and QQQ? Both are heavy in large technology companies, but QQQ holds the 100 largest non-financial Nasdaq-listed companies, while VUG selects growth companies from the whole US market. VUG has also been cheaper.

What is VUG’s value counterpart? VTV, the Vanguard Morningstar Value ETF, holds the value half of the large-cap market. VUG and VTV together cover roughly the same companies as a broad large-cap fund.

Does VUG outperform the S&P 500? Over the roughly two decades since its 2004 launch, VUG has finished ahead of the S&P 500, driven by the strong run of large technology companies. It has lagged in some years, notably 2022, and there is no guarantee the gap will continue.

What is the difference between VUG and VOOG? Both hold large US growth companies. VUG tracks a Morningstar growth index and is more concentrated in the biggest growth stocks, while VOOG tracks the S&P 500 Growth Index and holds more companies.

What is the difference between VOO, VUG and VTI? VOO holds the S&P 500, VTI holds almost the whole US market including small and mid-sized companies, and VUG holds only large growth companies. VOO and VTI behave very similarly, while VUG is a more concentrated growth tilt.

Does Warren Buffett recommend VOO or VTI? Warren Buffett has long recommended a very low-cost S&P 500 index fund for most investors. In his 2013 letter to Berkshire Hathaway shareholders, he said the instructions for his wife’s inheritance were to put 90% in a very low-cost S&P 500 index fund, and he named Vanguard’s. VOO is Vanguard’s S&P 500 ETF; he has not recommended a growth fund like VUG.

Your Portfolio Deserves an Educated Investor

VUG and VOO are both excellent, low-cost funds, but they do different jobs. VOO owns the whole large-cap market and makes a solid core; VUG concentrates on growth companies and adds both return potential and risk.

Imagine knowing exactly what you own, why you own it and what risks you’re taking. FRC’s three progressive ETF programmes take you from how index funds work, through building a balanced portfolio, to managing concentration and style risk. FRC’s programmes and memberships are open to everyone, whether you are investing $500 or $500,000.

Invest in understanding the market before investing in the market itself. Know what you are betting on before you tilt your portfolio.