Vanguard Russell 1000 Growth ETF (VONG +0.21%) and iShares Russell 2000 Growth ETF (IWO 0.26%) target different corners of the U.S. growth equity market, with VONG leaning large-cap and IWO focusing on small-cap stocks -- resulting in notable differences in cost, risk, and sector exposure.
Both funds aim to capture growth in U.S. equities, but VONG tracks large, established companies from the Russell 1000 Growth Index, while IWO focuses on smaller, up-and-coming firms in the Russell 2000 Growth segment. This comparison examines whether IWO’s small-cap approach stands up to VONG’s large-cap focus.
Snapshot (cost & size)
| Metric | VONG | IWO |
|---|---|---|
| Issuer | Vanguard | IShares |
| Expense ratio | 0.07% | 0.24% |
| 1-yr return (as of Dec. 15, 2025) | 14.4% | 10.6% |
| Dividend yield | 0.5% | 0.7% |
| Beta | 1.17 | N/A |
| AUM | $44.6 billion | $13.2 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-year return represents total return over the trailing 12 months.
IWO charges a noticeably higher annual expense ratio than VONG, but it is still below the industry average for ETFs. In exchange, IWO delivers a slightly higher yield, though the difference is modest at just 0.2 percentage points.
Performance & risk comparison
| Metric | VONG | IWO |
|---|---|---|
| Max drawdown (5 y) | -32.71% | -42.01% |
| Growth of $1,000 over 5 years | $2,064 | $1,235 |
What's inside
iShares Russell 2000 Growth ETF (IWO) targets over 1,000 U.S. small-cap growth stocks, spreading its assets across technology (25%), healthcare (22%), and industrials (21%). Its top holdings, such as Bloom Energy, Credo Technology Group Holding, and Fabrinet, each represent less than 2% of its assets, reflecting a broad and diversified approach. The fund has a long track record, with more than 25 years in the market, and no notable structural quirks.
In contrast, the Vanguard Russell 1000 Growth ETF (VONG) is concentrated in large-cap technology, with over half of its assets allocated to that sector and significant weights in Nvidia, Apple, and Microsoft. This tilt means VONG is more sensitive to moves in mega-cap tech, while IWO offers broader sector diversification and exposure to emerging growth companies.
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What this means for investors
Since 2010, VONG has delivered total returns of over 1,000% compared to IWO's 408%. For perspective, the S&P 500 rose nearly 700% over the same time. While this outperformance may make VONG look like the no-brainer selection -- it may not be for everyone.
My main issue with the VONG ETF is that it essentially is a concentrated bet on the Magnificent Seven (plus Broadcom). These eight stocks equal 59% of the ETF's assets. Meanwhile, in the S&P 500, these same eight stocks "only" account for 38% of the index's holdings. If and when the Magnificent Seven run slows down or reverses, VONG may not hold up very well.
Meanwhile, the IWO ETF takes an entirely different approach, targeting minute allocations dedicated to a wide array of small-cap growth stocks at much more reasonable valuations. Highlighting this point, IWO's P/E ratio is just 24, whereas VONG's is 39.
Personally, I'd rather buy IWO, despite its recent underperformance. It'd give me more exposure to stocks I know much less about, whereas VONG just doubles down on the attention-grabbing Magnificent Seven stocks. While IWO's expense ratio of 0.24% is higher than VONG's, it is below the ETF industry's average and is offset by the fund's slightly higher dividend yield.
Glossary
ETF: Exchange-traded fund; a pooled investment that trades on stock exchanges like a single stock.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges investors for management and operating costs.
Dividend yield: Annual dividends paid by a fund or stock, expressed as a percentage of its current price.
Beta: A measure of a fund's volatility compared to the overall market, typically the S&P 500.
Max drawdown: The largest percentage drop from a fund's peak value to its lowest point over a specified period.
AUM: Assets under management; the total market value of assets a fund manages on behalf of investors.
Large-cap: Companies with large market capitalizations, generally considered more established and stable.
Small-cap: Companies with smaller market capitalizations, often younger and potentially higher growth but riskier.
S&P 500: A widely followed index of 500 large U.S. companies, used as a benchmark for the stock market.
Sector diversification: Spreading investments across different industry sectors to reduce risk.
Total return: The investment's price change plus all dividends and distributions, assuming those payouts are reinvested.
Growth stock: A company expected to grow earnings or revenue faster than the market average.
