VUG vs. VTI [Vanguard Growth vs. Total Stock Market ETFs]

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OnBoard
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VUG vs. VTI [Vanguard Growth vs. Total Stock Market ETFs]

Post by OnBoard » Wed Nov 21, 2018 1:45 am

Have a 25 year horizon to retirement. Looking to invest in taxable account and want advice on VUG vs VTI (/VTSAX).

Thank you.

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JoMoney
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Re: VUG vs. VTI

Post by JoMoney » Wed Nov 21, 2018 2:35 am

VTI is Vanguard's Total U.S. Stock Market ETF
VUG is Vanguard's Growth Index ETF

VTI has annual expenses of .04% of assets annually
VUG has annual expenses of .05% of assets annually

VTI has minimal "turnover" and trades very little, about 3% of the funds assets per year
VUG turnover is about 8%, which isn't extremely high, but is relatively higher

VTI will track the performance of the entire US Stock Market.
VUG is essentially half of the market, the other half would be VTV (Vanguard's Value Index).
If you held a portfolio that roughly 50% VUG and 50% VTV you would essentially match the performance of VTI, but the individual pieces will pay more in expenses and have more turnover and taxable transactions because of the trading along the way.
If you picked just one between VUG or VTV there is some chance that one or other other will have higher returns between now and some future period. They might even switch back and forth between which one was leading or lagging depending on what time period you look at.
Nobody knows which one will have better performance going forward, they can make guesses, but nobody knows. We do know that the expenses will be lower on VTI, and it has a balance between VUG and VTV so you can be sure you'll be somewhere in the middle regardless which style, Growth or Value, does better.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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grabiner
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Re: VUG vs. VTI

Post by grabiner » Wed Nov 21, 2018 10:45 pm

You should not look at your taxable account in isolation. Since you will be spending money from both your taxable and tax-sheltered accounts, they should have a single overall allocation. Thus, if you have a bias towards value stocks in your 401(k), it might make sense to hold a growth fund somewhere else, either in your IRA or in a taxable account. But if you don't have such a bias, it is more natural to hold the whole stock market, which is what VTI does.
Wiki David Grabiner

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arcticpineapplecorp.
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Re: VUG vs. VTI

Post by arcticpineapplecorp. » Wed Nov 21, 2018 10:54 pm

look at the differences in style map between

VTSAX:

Image

source: https://portfolios.morningstar.com/fund ... ture=en-US

vs

VUG:

Image

source: https://portfolios.morningstar.com/fund ... ctcode=COM

now ask yourself this:

Do you see the difference between the two?
Is one preferable to the other?
Do you want mostly growth? Why?

Would you rather have growth, value and blend so that no matter what does well, you've got that.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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Random Musings
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Re: VUG vs. VTI

Post by Random Musings » Wed Nov 21, 2018 11:11 pm

Growth and value stocks cycle back and forth as who has better returns (value has won overall). Same as small vs large cap stocks.

Bring that LCG stocks have done better in the more recent timeframe, the choice of VUG sounds like performance chasing.

For the long run between these two, pick VTI. Besides that, VUG just sounds, well, ugly.

RM
I figure the odds be fifty-fifty I just might have something to say. FZ

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