IWF Is a Great Choice for Most, But I Like VUG ETF Better

Yahoo

23-06-2025

IWF and VUG hold top growth stocks.
VUG has a much lower ETF expense ratio.
VUG has also produced higher returns over its history than IWF.
10 stocks we like better than Vanguard Index Funds - Vanguard Growth ETF ›
The iShares Russell 1000 Growth ETF (NYSEMKT: IWF) is one of the largest and most popular exchange-traded funds (ETFs) focused on companies growing their earnings at above-average rates. It enables investors to target growth stocks, which can enhance their investment returns.
While I think the iShares Russell 1000 Growth ETF is great for most investors seeking to tap into the outsize return potential of growth stocks, I like the Vanguard Growth ETF (NYSEMKT: VUG) better. Here's why.
The iShares Russell 1000 Growth ETF and the Vanguard Growth ETF focus on holding companies growing their earnings faster than the market's average. For example, VUG's holdings have grown their earnings at a 27.5% annual rate over the past five years.
While both ETFs track growth stocks, there's a subtle difference. The Vanguard Growth ETF tracks an index, the CRSP US Large Cap Growth Index, that holds only large-cap growth stocks, while the iShares Russell 1000 Growth ETF tracks an index, the Russell 1000 Growth Index, that consists of large- and mid-cap stocks. As a result, IWF has more holdings than VUG (392 to 166).
However, because both funds have a market weighting, their top holdings are identical with very similar weightings:
IWF
VUG
Microsoft (11.7%)
Microsoft (11.3%)
Nvidia (11.1%)
Nvidia (10.3%)
Apple (9.5%)
Apple (10.1%)
Amazon (6.6%)
Amazon (6.3%)
Meta Platforms (4.6%)
Meta Platforms (4.4%)
Broadcom (3.8%)
Broadcom (4%)
Alphabet Class A (3.4%)
Tesla (3.3%)
Tesla (3.1%)
Alphabet Class A (3.3%)
Alphabet Class C (2.8%)
Alphabet Class C (2.6%)
Eli Lilly (2.2%)
Eli Lilly (2.2%)
Data sources: BlackRock and ETF.com
The slight difference in allocation is primarily due to the dates of the last available holdings update for these funds. Given that their top 10 holdings -- which comprise nearly 60% of their assets -- are roughly mirror images, you could easily choose either fund for similar exposure to the top growth stocks.
While the iShares Russell 1000 Growth ETF and Vanguard Growth ETF have very similar holdings, there are two notable differences. The first one is cost. IWF's ETF expense ratio is 0.19%, while VUG's is much lower at 0.04%. That's due to Vanguard's emphasis on keeping costs low for investors so that they can keep more of the returns generated by its funds.
To put the cost difference into perspective, for every $10,000 invested, you'd pay the IWF fund manager $19 annually while only paying $4 per year for VUG. That higher cost will eat into IWF's returns over the long term.
Speaking of returns, that's another area where VUG stands out compared to IWF:
ETF
1-Year
3-Year
5-Year
10-Year
Since Inception
IWF
7.6%
9.9%
19.9%
14.9%
7.4%
VUG
18.2%
19.9%
17.1%
15.3%
11.5%
Data sources: BlackRock and Vanguard. NOTE: IWF fund inception is 5/22/00, while VUG's is 1/26/04.
As that table shows, VUG has delivered much higher returns than IWF in every period other than the past five years. That's because larger-cap growth stocks have generally produced higher returns than mid-cap growth stocks in more recent years. That drag and its higher expense ratio have weighed on IWF's returns.
The iShares Russell 1000 Growth ETF is a great ETF to buy to increase your portfolio's allocation to faster-growing companies. However, I think the Vanguard Growth ETF is a better option. It provides investors with exposure to most of the same holdings at a lower cost. Its strategy has enabled it to produce higher returns for its investors over the years. That's why I'd pick VUG over IWF to add more growth to your portfolio.
Before you buy stock in Vanguard Index Funds - Vanguard Growth ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Vanguard Index Funds - Vanguard Growth ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $664,089!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $881,731!*
Now, it's worth noting Stock Advisor's total average return is 994% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join .
See the 10 stocks »
*Stock Advisor returns as of June 23, 2025
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Matt DiLallo has positions in Alphabet, Amazon, Apple, Broadcom, Meta Platforms, and Tesla and has the following options: short August 2025 $250 calls on Apple. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Tesla, and Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
IWF Is a Great Choice for Most, But I Like VUG ETF Better was originally published by The Motley Fool