Investors evaluating growth-focused ETFs face a critical decision between Schwab U.S. Large-Cap Growth ETF (SCHG) and Vanguard Growth ETF (VUG), each with distinct performance, expense ratios, and portfolio characteristics. Understanding these differences is essential for aligning with individual investment goals.
- SCHG has a 0.04% expense ratio, same as VUG, but lower portfolio turnover
- Over five years, SCHG returned 10.8% CAGR vs. VUG’s 11.2%
- SCHG managed $47 billion in assets; VUG holds $102 billion
- Both funds have tech exposure above 22%, but with differing sector weights
- Trailing 12-month returns: SCHG at 14.3%, VUG at 13.9%
- SCHG's top 10 holdings include Microsoft, Apple, and Nvidia
SCHG and VUG represent two leading options for investors seeking exposure to large-cap U.S. growth stocks, but their structural differences can influence long-term returns. SCHG, managed by Charles Schwab, holds 152 holdings with a focus on momentum and earnings growth, while VUG, offered by Vanguard, tracks the CRSP US Large Cap Growth Index and includes 178 companies. Both funds prioritize large-cap firms, but their top 10 holdings differ significantly in weight and composition. The expense ratio is a key differentiator: SCHG charges 0.04%, one of the lowest in the ETF space, compared to VUG’s 0.04%—a near-identical cost, but SCHG has historically demonstrated slightly lower portfolio turnover, suggesting potentially better tax efficiency. Over the past five years, SCHG has posted a compound annual growth rate (CAGR) of 10.8%, while VUG returned 11.2%, reflecting minor performance divergence despite similar index exposure. In the trailing 12 months, SCHG delivered a 14.3% return, slightly outpacing VUG’s 13.9%. Asset size also plays a role: VUG manages $102 billion in assets, making it the larger of the two, while SCHG holds $47 billion. Larger size can improve liquidity and reduce tracking error, but may also limit agility in portfolio rebalancing. SCHG’s top holdings include Microsoft, Apple, and Nvidia, with a 22.5% concentration in tech, while VUG has a 23.1% tech exposure, with slightly heavier weights in healthcare and consumer discretionary sectors. Investors should consider their risk tolerance, tax considerations, and desired sector exposure when choosing between the two. For those prioritizing cost-efficiency and lower turnover, SCHG may offer a strategic edge. For investors favoring a broader growth index with higher liquidity, VUG remains a strong contender.