The iShares U.S. Growth ETF (IWY) has delivered stronger historical returns compared to the Vanguard U.S. Growth ETF (VONG), though VONG maintains a lower expense ratio. Investors face a trade-off between cost efficiency and performance in growth-oriented ETFs.
- IWY has delivered a 5-year cumulative return of 132.7%, outperforming VONG’s 114.3%.
- VONG’s expense ratio is 0.03%, significantly lower than IWY’s 0.15%.
- IWY’s superior returns are attributed to its sector weighting and market capture strategy.
- VONG remains a top choice for investors prioritizing low expense ratios.
- Liquidity and trading efficiency favor IWY in active market conditions.
- Investor allocation decisions now reflect a balance between cost and performance.
The iShares U.S. Growth ETF (IWY) has outpaced the Vanguard U.S. Growth ETF (VONG) over the past five years, generating a cumulative return of 132.7% versus VONG’s 114.3%. This performance gap highlights a critical consideration for investors selecting growth-focused exchange-traded funds. While IWY has consistently captured broader market momentum, its higher fee structure has drawn attention from cost-conscious investors. VONG, with an expense ratio of 0.03%, continues to offer one of the lowest cost options among large-cap growth ETFs. In contrast, IWY charges 0.15%, nearly five times higher than VONG’s fee. Despite this, IWY’s strategy—tracking a market-cap-weighted index of U.S. large-cap growth stocks—has led to better risk-adjusted returns, particularly in high-growth sectors like technology and healthcare. The divergence in performance underscores a recurring theme in ETF investing: higher fees do not always correlate with superior returns, but in this case, IWY’s active management and sector allocation have justified its cost premium for many investors. Additionally, IWY’s liquidity and broader institutional adoption have contributed to tighter bid-ask spreads and improved execution during market volatility. Market participants, including financial advisors and retail investors, are reassessing their growth ETF allocations based on this data. The performance gap may prompt shifts in asset flows, with some investors favoring IWY for growth exposure and others sticking with VONG for long-term cost savings. The decision ultimately depends on investment horizon, risk tolerance, and return objectives.