Russell 1000 Growth ETF Showdown: Why VONG and IWY Take Different Paths to Growth Investing

When building a portfolio focused on large-cap U.S. growth stocks tracking the russell 1000 growth space, two ETFs consistently emerge as popular choices: Vanguard Russell 1000 Growth ETF (VONG) and iShares Russell Top 200 Growth ETF (IWY). While both funds operate in the same investment universe, they pursue distinctly different strategies—one prioritizes affordability and breadth, the other concentrates on top performers. Understanding their differences becomes essential for investors aiming to align their fund selection with personal risk tolerance and cost preferences.

Cost Structure: Where VONG Pulls Ahead

The expense ratio represents one of the clearest differentiators between these two russell 1000 growth-focused vehicles. VONG charges just 0.07% annually, meaning investors pay only $7 in yearly fees per $10,000 invested. By contrast, IWY’s 0.20% expense ratio translates to $20 in annual costs for the same investment size—nearly triple VONG’s fee burden.

Beyond raw costs, the funds differ significantly in scale. VONG manages $36.4 billion in assets under management, compared to IWY’s $16.2 billion. This size advantage permits Vanguard to operate with greater efficiency, translating into lower fees passed directly to shareholders. For cost-conscious investors, VONG’s competitive pricing becomes a material advantage, particularly for long-term holders where fee drag compounds over decades.

Both funds offer modest dividend yields—VONG at 0.5% and IWY at 0.4%—a marginal difference that slightly favors Vanguard’s offering. Neither figure represents the primary return driver for growth-oriented portfolios, but every basis point matters for total return calculations.

Portfolio Construction: Diversification vs. Concentration

The philosophies underlying these two russell 1000 growth ETFs diverge sharply when examining holdings composition. VONG maintains 394 individual securities spread across numerous sectors, creating a genuinely diversified growth portfolio. Its sector allocation reflects this breadth: 53% technology, 13% consumer cyclicals, and 13% communication services, with meaningful exposure to healthcare, financials, and other industries.

IWY adopts a more concentrated approach, selecting just 110 holdings. This selective method concentrates 66% of assets within the technology sector alone, with 11% allocated to consumer cyclicals and 7% to healthcare. The top three positions—Nvidia Corp (13.88%), Apple Inc (12.12%), and Microsoft Corp (11.41%)—account for roughly 37% of the entire portfolio. Such concentration amplifies single-stock risk but simultaneously captures the outsized returns generated by mega-cap technology leaders.

VONG’s top holdings mirror IWY’s, but each represents a smaller portfolio slice: Nvidia, Apple, and Microsoft remain bedrock positions, yet their individual weightings never threaten portfolio stability through concentrated exposure. For investors uncomfortable with heavy tech bets, VONG’s diversified approach provides meaningful downside protection during sector rotations.

Historical Returns: Performance and Risk Trade-offs

Despite their structural differences, VONG and IWY delivered remarkably similar one-year returns as of January 9, 2026: VONG posted 19.6% while IWY achieved 19.4%—virtually identical results despite opposing construction methodologies.

Over extended periods, however, meaningful divergence emerges. The five-year snapshot reveals IWY’s concentrated tech positioning paid substantial dividends: IWY generated $2,102 from a $1,000 initial investment, representing a 110.2% total return and a 16.9% compound annual growth rate. VONG, meanwhile, accumulated $1,975 from the same $1,000 stake, translating to 97.5% total returns and 15.5% annualized gains.

This five-year advantage stemmed directly from the technology sector’s extraordinary bull run. IWY’s heavy concentration in Nvidia, Apple, and Microsoft—companies that led the artificial intelligence and mega-cap resurgence—generated superior absolute returns. VONG’s broader diversification, while providing better downside cushioning, necessarily diluted gains by holding lower-performing sectors.

Both funds exhibited identical maximum drawdowns of approximately -32.7% over the five-year period, revealing that neither portfolio structure substantially reduced volatility during severe corrections. The beta measurements for both funds equaled 1.12, confirming they amplify overall market moves by approximately 12% relative to the S&P 500.

Finding Your Fit: Investment Philosophy Matters

For investors navigating the russell 1000 growth landscape, no universal “winner” exists between VONG and IWY—each serves legitimate investor profiles. Cost-conscious, diversification-seeking investors gravitate toward VONG’s broader 394-holding structure and 0.07% fee. This fund delivers respectable returns while maintaining exposure across multiple sectors and industries. Over longer periods, VONG’s lower fees compound into meaningful wealth preservation, effectively delivering higher after-fee returns despite lower gross performance.

Growth-focused investors comfortable with technology sector concentration and possessing higher risk tolerance may prefer IWY’s concentrated portfolio. The fund’s demonstrated ability to capture technology’s outperformance during bull markets appeals to investors believing mega-cap tech leaders represent the future growth engines. However, this concentration introduces materially higher downside risk during sector corrections and technology underperformance cycles.

Both funds charge substantially lower fees than actively managed alternatives, eliminating another category of performance drag. Neither introduces leverage, currency hedging, or derivative structures that might amplify complexity without corresponding benefit.

The Bottom Line

Selecting between these russell 1000 growth ETFs ultimately reflects personal preferences around cost, diversification, and risk tolerance rather than fundamental fund quality. VONG presents the value proposition—lower fees, broader holdings, and respectable returns with dampened volatility. IWY offers the growth proposition—concentrated exposure to technology leaders that captured substantial recent outperformance, paired with willingness to accept higher concentration risk.

Investors with 20+ year time horizons benefit most from VONG’s fee efficiency, while those with shorter windows or higher risk appetites may tolerate IWY’s concentrated approach for potential return enhancement. Neither choice represents a mistake; rather, both represent rational responses to differing investment philosophies and market outlooks.