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Should Vanguard Russell 1000 Growth ETF (VONG) Be on Your Investing Radar?

Style Box ETF report for VONG

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This story originally appeared on Zacks

Launched on 09/22/2010, the Vanguard Russell 1000 Growth ETF (VONG) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Growth segment of the US equity market.

- Zacks

The fund is sponsored by Vanguard. It has amassed assets over $8.22 billion, making it one of the larger ETFs attempting to match the Large Cap Growth segment of the US equity market.

Why Large Cap Growth

Large cap companies usually have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

Growth stocks have higher than average sales and earnings growth rates. While these are expected to grow faster than the broader market, they also have higher valuations. Additionally, growth stocks have a greater level of risk associated with them. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.08%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 0.58%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Information Technology sector--about 46.30% of the portfolio. Consumer Discretionary and Telecom round out the top three.

Looking at individual holdings, Apple Inc. (AAPL) accounts for about 10.39% of total assets, followed by Microsoft Corp. (MSFT) and Amazon.com Inc. (AMZN).

Performance and Risk

VONG seeks to match the performance of the Russell 1000 Growth Index before fees and expenses. The Russell 1000 Growth Index measures the performance of large-capitalization growth stocks in the United States.

The ETF has added roughly 0% so far this year and it's up approximately 27.51% in the last one year (as of 01/03/2022). In the past 52-week period, it has traded between $59.12 and $79.55.

The ETF has a beta of 1.03 and standard deviation of 23.70% for the trailing three-year period, making it a medium risk choice in the space. With about 505 holdings, it effectively diversifies company-specific risk.

Alternatives

Vanguard Russell 1000 Growth ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VONG is an excellent option for investors seeking exposure to the Style Box - Large Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.

The Vanguard Growth ETF (VUG) and the Invesco QQQ (QQQ) track a similar index. While Vanguard Growth ETF has $90.12 billion in assets, Invesco QQQ has $214.90 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.



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Vanguard Russell 1000 Growth ETF (VONG): ETF Research Reports

 

Amazon.com, Inc. (AMZN): Free Stock Analysis Report

 

Apple Inc. (AAPL): Free Stock Analysis Report

 

Microsoft Corporation (MSFT): Free Stock Analysis Report

 

Invesco QQQ (QQQ): ETF Research Reports

 

Vanguard Growth ETF (VUG): ETF Research Reports

 

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