Vanguard Total Stock Market ETF vs. Vanguard Growth Index Fund ETF: Which Should You Choose?

Investing in Vanguard funds has become a trend that has notably increased since 2008, with the company's widespread trust leading to an impressive $7.5 trillion in assets managed through various investment vehicles, including mutual funds and ETFs. Although Vanguard has already achieved remarkable success, potential international expansion could significantly boost its financial holdings.

Two of Vanguard's standout ETFs are the Vanguard Total Stock Market Index Fund ETF (VTI) and the Vanguard Growth Index Fund ETF (VUG). The VTI ETF allows investors to diversify their portfolio by tracking the CRSP US Total Market Index, covering a wide spectrum of company sizes and sectors. Unlike VTI, the VUG ETF focuses specifically on large-cap companies with substantial growth potential by tracking the CRSP US Large Cap Growth Index.

VTI: Safety and Diversification in One Fund

VTI appeals to investors seeking extensive market coverage through a single investment. Its low 0.03% expense ratio and 1.35% annualized yield, combined with a five-year average annual ROI of 12.3%, make it a favored choice for 'lazy investors'. Microsoft, representing 6.12% of the ETF's portfolio, exemplifies the sort of blue-chip stock included in VTI's 3,717 holdings.

VUG: Concentrating on High Growth Potential

VUG caters to those who prefer investing in fewer, growth-oriented companies, holding 199 stocks with Microsoft accounting for nearly 13% of its portfolio. Despite this specificity, VUG boasts a low expense ratio of 0.04% and has delivered a remarkable five-year average annual return of 15.8%. However, its 0.47% yield is modest, in keeping with the fund's growth focus over immediate income.

Investment Strategies: VTI vs. VUG

Choosing between VTI and VUG depends on an investor's goals and risk tolerance. VTI is suitable for investors looking for a conservative investment that tracks the broader market for the long haul. On the other hand, VUG might appeal to those willing to accept higher risk for the possibility of greater short-to-medium-term growth. Ultimately, the decision comes down to each investor's individual profile and investment strategy.

Vanguard, ETFs, Investing