VOOG vs. VYM: Which Vanguard ETF Is the Better Choice?

One large statement galore investors mightiness beryllium wrestling with close present is whether to bargain maturation stocks oregon high-yield dividend stocks. Two Vanguard exchange-traded funds (ETFs) let you to summation vulnerability to 2 precise antithetic parts of the U.S. economy.

The Vanguard S&P 500 Growth ETF (NYSEMKT: VOOG) offers a portfolio of 146 U.S. large-cap maturation stocks, with a dense weighting toward the tech assemblage -- 52.6% of the fund's assets are successful tech stocks. It has powerfully outperformed the S&P 500 scale for the past 10 years.

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The Vanguard High Dividend Yield ETF (NYSEMKT: VYM) is much diversified and puts your wealth to enactment successful companies little progressive with the U.S. artificial quality (AI) boom. This ETF offers a portfolio of 605 holdings, with a absorption connected large-cap worth stocks. The types of companies it invests successful thin to beryllium financially strong, consistently profitable, and wage dependable dividends.

This money has underperformed the S&P 500 (and the Vanguard S&P 500 Growth ETF) for the past 10 years. But immoderate investors mightiness privation to see it due to the fact that of its caller show and the unsocial premix of stocks it holds.

Let's instrumentality a person look astatine these 2 Vanguard ETFs to spot which could beryllium a amended bargain for your concern goals.

Vanguard S&P 500 Growth ETF: 10 years of 18.2% annualized returns

The Vanguard S&P 500 Growth ETF is not a emblematic S&P 500 ETF. Instead of owning the full benchmark index, this money focuses lone connected maturation stocks wrong the S&P 500. Like a Nasdaq-100 scale tracking fund, specified arsenic the Invesco QQQ ETF, this Vanguard maturation ETF allows investors to instrumentality a concentrated presumption successful the U.S. tech sector.

The fund's apical 5 holdings are Nvidia (14.3% of the fund), Alphabet (11.04% of the fund, combining Class A and Class C shares), Microsoft (9.3%), Apple (6.4%), and Broadcom (5.9%). The apical 10 holdings marque up astir 60% of the fund.

Although it's top-heavy with large tech names and AI stocks, the money has delivered beardown results for investors. For the past 10 years, the Vanguard S&P 500 Growth ETF has earned annualized returns of 18.2%. It charges a debased disbursal ratio of 0.07%.

With specified fantabulous past performance, wherefore would anyone not privation to bargain this fund? One crushed could beryllium precocious valuations. If you judge the U.S. tech assemblage is excessively richly valued and that the AI roar mightiness crook to bust, buying this money close present mightiness consciousness excessively risky. The Vanguard S&P Growth ETF is trading astatine a price-to-earnings (P/E) ratio of 31.08, portion the Vanguard High Dividend Yield ETF offers a little P/E aggregate of 20.83.