Which Growth ETF Is the Better Buy: Vanguard's Large-Cap VUG or iShares' Small-Cap ISCG?
Key PointsThe Vanguard Morningstar Growth ETF (VUG) offers concentrated exposure to large-cap giants with a rock-bottom 0.03% expense ratio.
Investors are currently weighing the merits of two low-cost ETFs: Vanguard's Large-Cap Growth VUG and iShares' Small-Cap Growth ISCG. VUG focuses on the biggest, most influential U.S. companies, which has led to a portfolio heavily skewed towards technology. Conversely, ISCG takes a broader approach, targeting smaller companies with high growth potential.
The beta of an ETF measures its price volatility in relation to the S&P 500. This is calculated using the fund's monthly returns over its history, up to five years. VUG's beta is 1.08, while ISCG's is 1.23, indicating that ISCG is more volatile than VUG.
In terms of performance, VUG has delivered a 1-year return of 29.33%, compared to ISCG's 1-year return of 28.87%. Both funds have relatively low expense ratios, with VUG at 0.03% and ISCG at 0.06%. However, ISCG offers a higher dividend yield of 0.59%, compared to VUG's 0.40%. This makes ISCG the more attractive option for investors seeking income as well as growth.
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