VOO offers broader sector diversification as it aims to track the performance of the S&P 500 Index, which includes 500 of the largest U.S. companies, representing a broad cross-section of the U.S. economy. On the other hand, VOOG focuses on higher-growth stocks within the same S&P 500 index.
In addition to this, another difference is in expense ratio. VOO’s expense ratio is pretty low around 0.03%, which makes it attractive and cost-effective for long-term investors. VOOG’s expense ratio is higher than VOO, around 0.10%.
The higher value of VOOG makes sense as it is actively managed to decide which of S&P 500 companies need to in VOOG. Typically about 240 to 270 companies from S&P 500 are present in VOOG. The exact number can fluctuate slightly as companies are added or removed based on market conditions and rebalancing.
Let us look at the annual returns of VOO and VOOG since 2010.
Quickly summarizing the comparison of performance of VOO and VOOG, we can see that both generally show positive returns in most years, with a few exceptions. 2013 was a standout year for both, with returns over 32%. Similarly, 2018 and 2022 were the only years with negative returns for both.
2022 saw significant losses, with VOOG performing worse (-29.48%) compared to VOO (-18.17%). In the most recent years (2023-2024), both have shown strong positive returns, with VOOG slightly outperforming VOO. VOOG tends to outperform VOO in most years, but there are exceptions (e.g., 2012, 2016).