Deciding which stocks to buy in the market can be tricky. This article compares two popular funds for your portfolio: VOO and VOOG.
Investing is a common way to grow your savings. Financial advisors often suggest different strategies depending on your financial goals and capacity. But how do you know which funds are worth it? Options like equities, commodities, mutual funds, dividend stocks, or stock funds can offer good returns.
Vanguard might be a good choice. It’s a well-known mutual fund and ETF company that provides low-cost options with strong past performance. This article will compare two Vanguard S&P 500 ETFs: VOO and VOOG.
VOO and VOOG are based on the S&P 500 index and are popular, low-cost ETFs available through reputable brokerage firms. Unlike mutual funds, ETFs can be bought or sold anytime during business hours. Mutual funds, however, can only be traded at the end of the business day. Both ETFs are from Vanguard, known for its diversified and low-fee options.
Launched in 2010, the Vanguard S&P 500 ETF (VOO) is designed to track the S&P 500 index, which includes the 500 largest publicly traded companies in the US. It covers various sectors like tech, finance, communication, and healthcare. VOO is highly liquid with high daily trading volumes, making it easy to buy and sell. It has an annual dividend yield of 1.64% and an expense ratio of 0.03%. It’s ideal for investors with low risk tolerance and a shorter time horizon.
VOOG, another Vanguard ETF, focuses on growth stocks from the S&P 500 growth index. These stocks have high growth potential and reinvest their earnings into new ventures. VOOG tracks 276 companies and has an average capitalization of $502 billion. It has a return on equity of 22.5% and an expense ratio of 0.10%. VOOG is considered a large-cap growth fund, with major holdings in companies like Amazon, Apple, Facebook, Google, and Tesla.
The main differences between VOO and VOOG include their expense ratios and the number of securities they hold. VOO’s expense ratio is 0.03%, while VOOG’s is 0.10%. VOO holds about 500 securities, whereas VOOG holds 276. VOO has an annual volatility rate of 13.13%, while VOOG’s is 12.89%. VOO tends to be more stable, making it a good choice for risk-averse investors. VOOG, with its focus on growth stocks, may offer higher returns but comes with more risk.
VOOG leans heavily on tech stocks, with over 30% of its assets in this sector. VOO also invests significantly in technology and finance, but it is more diversified across other sectors like healthcare and energy. Over the past five years, VOOG has had a higher annual return than VOO (21.66% vs. 17.60%). However, over the last ten years, VOO outperformed VOOG (17.13% vs. 14.80%).
The choice between VOO and VOOG depends on your investment goals and risk tolerance. VOO is better for those seeking stability and lower risk, while VOOG is suited for those willing to take on more risk for potentially higher returns. Always do your due diligence and understand the risks before investing.