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Large-Cap Growth Fund with a Low Cost

One of the goals of the giant exchange-traded fund Vanguard Growth ETF (VUG) is, in its own words, “to provide a convenient way to match the performance of many of the nation’s largest growth stocks.”

VUG does so by selecting a group of mostly large-cap, as well as some mid-cap companies based on six growth factors. They are: expected long-term growth in earnings per share (EPS), expected short-term growth in EPS, three-year historical growth in EPS, three-year historical growth in sales per share, current investment-to-assets ratio and return on assets.

VUG is a massive fund with $27.97 billion in total assets under management and an average daily trading volume of $82.8 million, giving it strong liquidity.

As a result of its focus on growth, VUG is heavily invested in the technology sector (28.23% of fund holdings). In particular, VUG favors the FANG (Facebook, Amazon, Netflix, and Google) stocks, which are four high-performing technology stocks in the market as of 2017. Other sectors the fund focuses on are consumer cyclical, 18.03%, and health care, 14.49%.

VUG prides itself on its management efficiency, which it passes down to its investors in the form of a super-low expense ratio of only 0.06%. This number is 95% lower than the average expense ratio of fund with similar holdings. Overall, this makes VUG a good choice for growth investors seeking inexpensive and diversified exposure.

It is worth noting that, as with all Vanguard funds, VUG’s holdings are disclosed monthly rather than daily. This limits the fund’s transparency and may discourage some sensitive investors.

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Top five holdings of the fund are Apple (AAPL), 6.77%; Amazon.com (AMZN), 3.89%; Facebook (FB), 3.88%; Alphabet Inc. A (GOOGL), 2.73%; and Alphabet Inc. C (GOOG), 2.66%.

For those who are looking for future growth, the Vanguard Growth ETF (VUG) may be worth adding to your portfolio.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Successful Investing, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.