Vanguard Growth Index Fund ETF Shares (VUG)VUG

ETF Vanguard Growth Index Fund ETF Shares (VUG)

Profile:

VUG is an ETF that tracks the CRSP US Large Cap Growth Index. It invests in large-cap U.S. companies with high growth potential. The fund's primary focus is on the technology sector, with a smaller allocation to other sectors such as healthcare and consumer discretionary. VUG uses a passive management strategy, seeking to replicate the performance of its index.

Objective:

The primary investment goal of VUG is to provide long-term capital appreciation by investing in a basket of high-growth U.S. stocks.

Issuer:

• Company: Vanguard
• Reputation and Reliability: Vanguard is known for its low-cost and index-tracking funds. It is considered a highly reliable and reputable company in the financial industry with a long track record of success.
• Management: The fund is managed by a team of experienced professionals with extensive knowledge of the U.S. equity market.

Market Share:

VUG is the second-largest ETF in the growth stocks investment style box with a market share of approximately 14%.

Total Net Assets:

As of October 26, 2023, VUG has approximately $91.7 billion in assets under management, making it one of the largest ETFs globally.

Moat:

• Low fees: VUG has an expense ratio of just 0.04%, making it one of the least expensive ETFs in its category.
• Diversification: The fund invests in a large number of growth stocks, reducing exposure to any single company.
• Strong track record: VUG has historically outperformed its benchmark index.

Financial Performance:

• VUG has delivered a return of over 15.63% in the past year and over 13.91% on an annualized basis over the past three years.
• The fund has outperformed its benchmark, the CRSP US Large Cap Growth Index, by 1.54% over the past year.
• VUG is considered a relatively volatile ETF, with a beta coefficient of 1.24.

Growth Trajectory:

The growth stock market is expected to continue growing over the long term, driven by technological innovation. VUG is well-positioned to benefit from this trend.

Liquidity:

• Average Trading Volume: VUG trades over 17 million shares daily, making it a highly liquid ETF.
• Bid-Ask Spread: The bid-ask spread is typically less than 0.05%, making it affordable and easy to trade.

Market Dynamics:

• Economic growth: A robust economy can boost earnings growth for the companies in VUG's portfolio and drive the fund's price up.
• Interest rates: Rising interest rates may make growth-oriented stocks less attractive compared to established value-oriented stocks, putting downward pressure on VUG.
• Technological innovation: Continued innovation in sectors with high representation within VUG, like technology or healthcare, can contribute to the fund's outperformance.

Competitors:

Some key competitors of VUG include:

• IVW - iShares S&P 500 Growth ETF (10.76% market share)
• SCHG - Schwab U.S. Large-Cap Growth ETF (8.65% market share)
• MGK - iShares Russell Midcap Growth ETF (3.92% market share)
• VGT - Vanguard Information Technology ETF (3.09% market share)

Expense Ratio: VUG has an expense ratio of 0.04%.

Investment Approach:

• VUG is a passively managed ETF that tracks its benchmark index.
• The fund primarily holds U.S. large-cap stocks in the information technology, healthcare, consumer discretionary, and financials sectors with a growth-oriented approach.

Key Points:

• VUG provides exposure to a broad basket of high-growth U.S. stocks.
• The fund has historically outperformed its benchmark.
• It offers investors low expense and high liquidity with a passively managed approach.

Risks:

• VUG is considered a relatively volatile investment due to its focus on growth stocks and large market capitalization.
• The fund is susceptible to market fluctuations in the technology sector, which can significantly influence its performance.
• The concentration on a few significant holdings may amplify losses during market downturns or if specific stocks underperform.

Who Should Consider Investing: VUG is suitable for long-term investors with an aggressive risk profile who are comfortable with the potential for higher volatility for the prospect of higher growth potential than the broader market.

Fundamental Rating Based on AI: 8 out of 10. VUG boasts robust fundamentals, including its impressive historical performance, strong track record of management expertise, and competitive advantage due to its low expense ratio. However, it is essential to consider the inherent risk associated with its high growth-oriented approach and potential for volatility within a diversified investment strategy.

Resources and Disclaimers:

• Data for this analysis was gathered from Vanguard and Yahoo Finance websites on October 26, 2023.
• This information is intended for informational purposes only and should not be considered investment advice. All investment decisions should be made with the assistance of a professional and with careful consideration of your financial goals and risk tolerance.