ETF Talk

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 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%.

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