Vanguard Growth Index provides a market-cap-weighted portfolio of the largest and fastest-growing companies in the U.S. market. Concentration presents some risks, but its low turnover, tight tracking, and razor-thin expense ratio make this one of the best large-growth funds available. 
The fund tracks the CRSP U.S. Large Cap Growth Index, which captures the growth-oriented side of the large-cap market. Growth stocks tend to have high valuations because of positive investor sentiment around their superior growth prospects. While growth stocks constitute most of the fund, value, and blend stocks are also present, which should steady the fund when its growth holdings can't meet their lofty expectations.
Market-cap weighting is an efficient way to size holdings because it harnesses the market's consensus opinion of each stock's relative value. Stocks that grow in size take up a larger share of the portfolio, while shrinking companies that may be struggling will have less importance. Generous buffers around the fund's size and style constraints improve the breadth of the portfolio and help tame turnover, leading to reduced trading costs.
Pronounced sector biases and firm-level concentration warrant consideration. As of May 2023, the fund’s top 10 holdings made up more than half of its allocation, with Apple AAPL (14%) and Microsoft MSFT (12%) accounting for 26% by themselves. Certain sector concentrations are inherent to the large-growth category, but they are even more pronounced here. The fund’s technology stake exceeded the average large-growth fund by about nine percentage points as of May 2023. Much of that difference comes at the expense of the healthcare and financial sectors, with their allocation falling short of the fund’s average peer in recent years.
Performance has been strong since the fund started tracking its current index in April 2013. From that point through May 2023, its ETF share class outperformed its average category peer by more than 2 percentage points annually. Volatility was higher owing to its concentrated portfolio, but the still held a risk-adjusted-return advantage.

Analyst Rating

An excellent representative of the large growth Morningstar Category.

Analyst

Zachary Evens

Microsoft

Apple

NVIDIA

Amazon

Alphabet

Eli Lilly

Tesla

Visa

This strategy efficiently harnesses the market's collective wisdom about the largest and fastest-growing companies in the U.S. market. It earns an Above Average Process Pillar Rating.

Above Average

Process

The Vanguard Equity Index Group boasts seasoned managers and a dedicated supporting staff well-equipped to provide tight index tracking, earning it an Above Average People Pillar Rating.
Gerard O’Reilly and Walter Nejman are the named managers on this strategy. O’Reilly, a Principal at Vanguard, has been with the firm since 1992. Nejman joined him as a comanager in 2016 and began with the firm in 2005. Though there has not been management turnover lately, Vanguard frequently rotates its managers to promote breadth and depth across the team.
The managers are responsible for the fund’s trading, providing more portfolio insights than a stand-alone trader. They are supported by a global team of dedicated personnel and sophisticated, scalable technology that optimize precision and reduce managers’ workload. Its independent risk management team works closely with the managers to monitor trades and review any potential issues. Managers’ compensation is tied to performance using a combination of tracking error and excess return metrics, which aligns their interests with investors’.

People

As The Vanguard Group settles on new senior leadership, it retains a High Parent rating.

Vanguard announced current CEO Tim Buckley will step down by the end of the year, marking an end to his 33 years at the firm. Historically, Vanguard has pronounced CEO retirements while simultaneously signaling who (from inside the firm) would take over. In this instance, Vanguard’s board said it will evaluate internal and external candidates in the coming months to find its next, and fifth, leader, though it also promoted CIO Greg Davis to president.

Vanguard flourished in several respects under Buckley’s leadership. Assets under management have grown by two thirds over his six years at the helm, while its asset-weighted average US fund fee ratcheted lower to 0.08% at the end of 2023. Vanguard further refined its advice business through its low-cost Digital Advisor platform and more holistic Vanguard Personal Advisor Services, and it debuted promising investment options.

Vanguard has had its share of challenges under Buckley, too. Growing its business outside the US has proved difficult, and ex US investors account for less than 10% of AUM. Between 2019 and 2023, Vanguard’s efforts to build its China business underwent dramatic shifts, with the firm ultimately abandoning plans to launch low-cost index funds there. It also ended a partnership with Ant Financial to provide advisory services to retail investors. Inside the US, customer service issues have continued to be a problem, and some of Vanguard’s newer offers, such as margin loans, seem a departure from a more-conservative approach to investing.

Vanguard retains an investor-friendly culture at its core that’s burnished by a commitment to low costs and supported by its unique mutual ownership structure and direct-to-investor playbook.

High

Parent

Vanguard Growth ETF

VUG tracks the CRSP US Large Cap Growth Index, which selects large- and mid-cap stocks with growth characteristics. The index selects stocks based on six growth factors.

The fund tracks an index of large-cap stocks in the US. Holdings are selected and weighed based on growth factors.

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