VONG vs IWY: Which Growth ETF Truly Delivers for Growth Investors?

When it comes to large-cap U.S. growth exposure, two standout options capture investors’ attention: Vanguard Russell 1000 Growth ETF (VONG) and iShares Russell Top 200 Growth ETF (IWY). While both funds pursue the same general objective—capturing gains from America’s largest growth companies—they diverge significantly in approach, cost structure, and portfolio strategy. Understanding these differences is essential for investors looking to align their ETF choices with their financial goals and risk tolerance.

Cost Efficiency Compared: Fee Impact on Long-Term Returns

One of the most striking differences between these two growth-focused vehicles lies in their expense ratios. VONG charges just 0.07% annually, while IWY levies a 0.20% fee—nearly three times higher. For perspective, this means an investor holding $10,000 in VONG pays only $7 per year in fees, compared to $20 annually for IWY. While this might seem trivial in the near term, the cumulative impact compounds significantly over decades.

Consider a $100,000 investment held for 20 years. If both funds generate identical 10% annual returns before fees, the fee differential would cost IWY investors roughly $20,000 more in forgone compound growth—a substantial opportunity cost that shouldn’t be dismissed. VONG’s lower cost structure represents a meaningful advantage for buy-and-hold investors, particularly those managing long-term retirement portfolios.

VONG also edges out IWY on dividend yield, offering 0.5% compared to IWY’s 0.4%. This combination of lower expenses and higher income generation makes VONG particularly attractive for cost-conscious growth investors seeking to maximize net returns.

Portfolio Architecture: Breadth vs. Concentration

The philosophies underlying these two funds create markedly different portfolio structures. VONG holds 394 individual securities spread across multiple sectors, providing genuine diversification. Technology represents 53% of assets, while consumer cyclicals account for 13% and communication services another 13%. This balanced approach limits the impact of any single holding falling out of favor.

IWY takes a concentrated approach with just 110 holdings, heavily tilted toward technology stocks that comprise 66% of the portfolio. Consumer cyclicals represent 11%, and healthcare rounds out the major allocations at 7%. This narrower focus means that three megacap tech companies—Nvidia (13.88%), Apple (12.12%), and Microsoft (11.41%)—collectively account for over 37% of IWY’s portfolio value.

Both funds feature these same tech giants as top positions, but VONG’s broader base dilutes their individual impact. When Nvidia, Apple, and Microsoft represent less than 15% combined in a 394-holding fund, portfolio stability improves. For investors uncomfortable with concentrated exposure to big tech, VONG’s diversified structure offers psychological comfort alongside practical risk reduction.

Historical Performance and Risk Metrics

Over the five-year period examined, IWY’s concentrated bet on technology paid dividends. The fund delivered $2,102 on a $1,000 initial investment—a 110% total return equating to a 16.9% compound annual growth rate (CAGR). VONG generated a $1,975 return from the same $1,000 investment, representing 97.5% total return and 15.5% CAGR.

This performance differential—roughly 1.4 percentage points annually—precisely tracks IWY’s higher technology exposure during a period of tech sector dominance. However, both funds weathered the same maximum drawdown risk, each experiencing roughly -32.7% peak-to-trough declines over the five-year window. This identical risk profile suggests that VONG’s broader diversification didn’t meaningfully reduce downside vulnerability, though it does provide better recovery consistency.

As of early January 2026, one-year returns nearly converged: VONG delivered 19.6% versus IWY’s 19.4%, demonstrating that in shorter timeframes, the fee advantage partially offsetted the performance gap. Both funds significantly outpaced the S&P 500 benchmark, validating their focus on high-growth equities.

Asset Size and Fund Maturity

VONG manages $36.4 billion in assets under management (AUM), while IWY oversees $16.2 billion. VONG’s larger scale provides several practical advantages: superior liquidity, tighter bid-ask spreads for traders, and economies of scale that help maintain its rock-bottom expense ratio. IWY, with a 16.3-year track record, offers the longer historical reference point for performance evaluation, though VONG’s impressive growth trajectory and professional management have also earned strong investor confidence.

Making Your Choice: Which ETF Aligns With Your Strategy?

For cost-conscious, diversified investors: VONG emerges as the more compelling choice. Its 0.07% expense ratio compounds into substantial long-term savings. The 394-holding portfolio provides genuine sector diversification, reducing single-stock concentration risk. Investors prioritizing lower fees and broad exposure, even at a modest performance sacrifice, typically gravitate toward VONG.

For aggressive, conviction-based investors: IWY appeals to those willing to accept concentrated technology exposure in exchange for amplified growth potential. The higher fee is a trade-off for portfolio focus and, historically, superior returns during technology-driven bull markets. Investors with higher risk tolerance and a bullish tech sector outlook may find IWY’s concentrated approach worthwhile.

For balanced growth investors: A middle-ground strategy could involve holding both funds in complementary allocations, though this introduces unnecessary complexity for most individual investors.

Both funds lack leverage, currency hedging, or complex structural features—they’re straightforward vehicles for capturing U.S. large-cap growth exposure. The choice ultimately depends on whether you prioritize cost efficiency and diversification (VONG) or concentrated growth exposure and historical performance (IWY). Neither fund choice is objectively “wrong”; they simply serve different investor philosophies and risk appetites. Professional analysts familiar with growth-focused investing strategies, like those contributing to major investment platforms, recognize both as legitimate tools for portfolio construction depending on individual circumstances and objectives.