ETF Comparison: Vanguard Growth ETF (VUG) Versus Vanguard Value ETF (VTV)

VUG vs VTV: Total cost of ownership

Vanguard is renowned for its low fees, and neither ETF disappoints—both VUG

and VTV

VTV

charge an ultra-low 0.04% expense ratio, or just $4 annually for every $10,000 invested.

Trading costs are similarly minimal. VUG has a 30-day median bid-ask spread of 0.022%, while VTV is slightly tighter at 0.017%. The difference is negligible for most investors, making it a moot point here.

One notable factor, though, is tax efficiency. VTV has a higher trailing 12-month yield of 2.29%, compared to VUG’s much lower 0.46%. While this makes VTV more attractive for income-focused investors, it also creates more tax drag in taxable accounts.

Verdict: This would be a tie in most cases, but factoring in tax efficiency as part of total ownership costs pushes VUG ahead.

VUG vs VTV: Methodology and holdings

This is where VUG

and VTV

VTV

diverge sharply.

Starting with VUG, it tracks the CRSP U.S. Large Cap Growth Index, a benchmark of 172 holdings covering the largest 85% of cumulative capitalization in the CRSP U.S. Total Market.

Stocks here are definitively growth-focused, with an average P/E ratio of 39.7x, P/B ratio of 11.4x, return on equity (ROE) of 37%, and an earnings growth rate of 26.2%.

VTV, on the other hand, follows the CRSP U.S. Large Cap Value Index, also selecting from the top 85% of the U.S. market but prioritizing value stocks.

As a result, it trades at a much lower 21.3x P/E and 3x P/B ratio. However, these stocks also deliver a more modest 16% ROE and 11.1% earnings growth rate.

The sector composition is distinctly different: VUG is heavily overweighted in technology (64%), with consumer discretionary and communications trailing behind. VTV skews toward “old economy” sectors like financials, healthcare, and industrials.

As expected, VUG is much more top-heavy. Its top 15 holdings account for 65% of the ETF’s weight, dominated by the “Magnificent Seven” stocks: Microsoft, Apple, Alphabet, Meta Platforms, Tesla, Amazon, and Nvidia.

By contrast, VTV is far more balanced, with its top 15 holdings making up just 28%. Its largest positions are more traditional, including Berkshire Hathaway, JPMorgan Chase, UnitedHealth, Exxon Mobil, Home Depot, Procter & Gamble, Walmart, and Johnson & Johnson.

Right now, the two portfolios share 24 overlapping holdings, representing 7.2% of VTV’s 340 holdings and 13.4% of VUG’s 186 holdings.

Verdict: It really depends on what you’re looking for. Personally, I’m not fond of tech concentration in indexes, so I would use VTV as a satellite allocation. But if you want to double down on tech and growth, VUG is a strong pick.

VUG vs VTV: Risk and return

Given the dramatically different strategies of VUG and VTV, an apples-to-apples comparison isn’t entirely fair. Growth stocks have vastly outperformed value over the past decade, but let’s look at the numbers anyway.

Short term, VUG

has clearly outpaced VTV

VTV

-0.86%

with higher 3-month, 1-year, and year-to-date returns. It has also garnered significantly higher inflows, signaling stronger investor interest in growth stocks.

What about risk? Short term, VTV has been markedly less volatile than VUG and experienced smaller maximum drawdowns. It especially held up well during the 2022 bear market.

Long term, from Jan. 30, 2004, to Dec. 17, 2024, VUG has delivered a 12.06% compound annual growth rate (CAGR) compared to VTV’s 9.03%. But it also did better in terms of risk too.

Over the same backtest period, VUG had a maximum drawdown of 50.67%, while VTV saw a steeper 59.26% decline. Both have had similar volatility, but VUG has delivered the better risk-adjusted returns, with a Sharpe ratio of 0.59 versus VTV’s 0.47.

Verdict: Objectively, VUG has been the better performer. If you believe growth stocks will continue to lead, VUG is the way to go. However, if you’re a contrarian investor looking for a deal, VTV offers an attractive alternative.

This article is for informational purposes only and does not in any way constitute investment advice. The author may express their own opinions, which may not represent the opinions of ETF Central or its affiliated partners. It is essential that you seek advice from a registered financial professional prior to making any investment decisions.