Vanguard VOO vs. iShares IWO: How S&P 500 Stability Compares to Small-Cap Growth Potential

The iShares Russell 2000 Growth ETF (NYSEMKT:IWO) and the Vanguard S&P 500 ETF (NYSEMKT:VOO) some supply entree to a ample swath of the U.S. equities market, but they instrumentality chiseled approaches that whitethorn entreaty to antithetic capitalist priorities.

While IWO targets assertive maturation successful smaller companies, VOO represents the halfway of the U.S. system by tracking the S&P 500. This examination highlights however these 2 chiseled segments of the marketplace person behaved implicit time.

Snapshot (cost & size)

Beta measures terms volatility comparative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr instrumentality represents full instrumentality implicit the trailing 12 months. Dividend output is the trailing-12-month organisation yield.

Cost is simply a superior differentiator, arsenic the Vanguard money is importantly much affordable for semipermanent investors. Additionally, those seeking passive income whitethorn similar VOO’s higher dividend yield, reflecting the cash-flow-positive quality of large-cap companies.

Performance & hazard examination

What's wrong

IWO provides vulnerability to astir 1,100 holdings, with industrials, technology, and healthcare making up its apical 3 sectors. Its largest positions see Bloom Energy, Credo Technology Group, and Sterling Infrastructure. This fund, which was launched successful 2000, has a trailing-12-month dividend of $1.51 per share.

In contrast, VOO tracks the S&P 500 and holds conscionable implicit 500 stocks, leaning heavy into technology, fiscal services, and connection services. Its largest positions see Nvidia, Apple, and Microsoft. VOO was launched successful 2010 and paid $7.13 per stock successful dividends implicit the trailing 12 months.

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What this means for investors

VOO and IWO instrumentality antithetic approaches to U.S. stocks: VOO targets the largest manufacture leaders, portion IWO focuses connected smaller, up-and-coming stocks.

VOO offers 3 large advantages implicit IWO: greater stability, little fees, and higher dividend income. Because this ETF holds stocks from 500 of the largest and strongest U.S. companies, it’s much apt to past periods of volatility. It offers a substantially little beta and max drawdown than IWO, suggesting smaller terms fluctuations implicit the past 5 years.