Exchange-traded funds have made implementing growth and value strategies simpler and cheaper than ever. With a single trade, you can gain diversified exposure to hundreds of growth stocks or value stocks, implement style rotation strategies, or build a blended portfolio with precise style allocations. But the proliferation of growth and value ETFs has also created confusion, as different providers define growth and value differently and the resulting products can perform quite differently despite similar names.
Major Growth ETFs: What You Need to Know
The growth ETF landscape is dominated by a few large, well-established funds that track different indexes and serve different purposes in a portfolio.
Vanguard Growth ETF (VUG) tracks the CRSP US Large Cap Growth Index and is one of the largest growth ETFs with approximately $324 billion in assets under management. It holds around 200 large-cap growth stocks with an expense ratio of just 0.04%, making it one of the cheapest growth ETF options. VUG’s top holdings are heavily concentrated in mega-cap technology, with companies like Apple, Microsoft, Nvidia, and Amazon representing significant portions of the fund. Its 10-year average annual return has been approximately 15.6%.
iShares Russell 1000 Growth ETF (IWF) tracks the Russell 1000 Growth Index and manages roughly $114 billion. It holds approximately 440 stocks, providing broader growth exposure than VUG but with a higher expense ratio of 0.18%. The Russell methodology classifies stocks based on price-to-book, forecast growth, and historical growth, producing a portfolio that overlaps significantly with VUG but includes more mid-cap growth names.
Schwab U.S. Large-Cap Growth ETF (SCHG) tracks the Dow Jones U.S. Large-Cap Growth Total Stock Market Index with a rock-bottom expense ratio of 0.04%, matching VUG as the cheapest large-cap growth option. It holds around 250 stocks and has closely tracked VUG’s performance, making it an excellent alternative for Schwab customers.
Invesco QQQ Trust (QQQ) is technically not a growth ETF but a Nasdaq-100 tracker. However, because the Nasdaq-100 is overwhelmingly composed of growth stocks, QQQ is frequently used as a growth vehicle. With roughly $300 billion in assets and an expense ratio of 0.20%, QQQ provides concentrated technology and growth exposure that has outperformed traditional growth indexes during tech-led rallies but underperformed during tech corrections.
Major Value ETFs: What You Need to Know
Vanguard Value ETF (VTV) tracks the CRSP US Large Cap Value Index with approximately $196 billion in assets and a 0.04% expense ratio. It holds around 340 stocks tilted toward financials, healthcare, industrials, and consumer staples. VTV’s 10-year average annual return has been approximately 10.8%, reflecting value’s persistent underperformance during the growth-dominated 2010s and early 2020s.
iShares Russell 1000 Value ETF (IWD) tracks the Russell 1000 Value Index with about $62.5 billion in assets and a 0.18% expense ratio. It holds approximately 850 stocks, making it the broadest value ETF on this list. The large number of holdings means IWD includes many stocks that are on the borderline between value and blend, producing a less pure value tilt than VTV.
Schwab U.S. Large-Cap Value ETF (SCHV) tracks the Dow Jones U.S. Large-Cap Value Total Stock Market Index at a 0.04% expense ratio. Like SCHG, it is an excellent low-cost alternative that closely tracks the Vanguard equivalent.
Performance Comparison: The Numbers
The performance divergence between growth and value ETFs over the past decade has been historically unprecedented. From 2014 through 2024, the Vanguard Growth ETF delivered a cumulative return of approximately 326%, compared to VTV’s approximately 178%. This means a $100,000 investment in VUG grew to roughly $426,000 while the same investment in VTV grew to approximately $278,000, a difference of $148,000.
Growth outperformed value in approximately eight of the past ten years, with the exceptions being years where rising interest rates or economic recovery favored cyclical value sectors. The widest single-year divergence occurred in 2020, when growth ETFs returned over 33% while value ETFs gained barely 1%. The narrowest gap in recent years was 2022, when value actually outperformed growth by over 20 percentage points as rising rates compressed growth valuations.
Year-to-date 2025 figures showed growth ETFs up approximately 20% versus value ETFs up approximately 12%, continuing the pattern of growth leadership but with a narrower spread than the extreme divergences of 2020-2021. The persistence of growth outperformance has led many investors to question whether value ETFs deserve any portfolio allocation at all, though our analysis of when value beats growth explains why abandoning value entirely is risky.
Holdings Composition Differences
The sector composition of growth versus value ETFs reveals why they perform so differently across market environments and why combining both creates genuine diversification.
Growth ETFs are dominated by technology (typically 45-55% of holdings), followed by consumer discretionary (15-20%) and healthcare (10-15%). This concentrated technology exposure explains both the spectacular gains during tech booms and the sharp losses during tech corrections. When you buy a growth ETF, you are making a substantial bet on the continued dominance of technology companies.
Value ETFs are more diversified across sectors, with financials (20-25%), healthcare (15-20%), industrials (10-15%), consumer staples (8-12%), and energy (5-10%) all representing meaningful allocations. This sector diversification provides more balanced exposure to the broader economy, which is why value ETFs tend to perform better during economic expansions when multiple sectors participate in earnings growth.
Importantly, there is virtually no overlap between pure growth and pure value ETFs in their top holdings. Growth ETFs’ largest positions (Apple, Microsoft, Nvidia, Amazon) do not appear in value ETFs, and value ETFs’ largest positions (Berkshire Hathaway, JPMorgan Chase, ExxonMobil, Johnson & Johnson) do not appear in growth ETFs. This lack of overlap means combining growth and value ETFs provides genuine style diversification rather than duplicating exposure.
Expense Ratios and Tax Efficiency
For long-term investors, expense ratios and tax efficiency can meaningfully impact returns. The good news is that the largest growth and value ETFs are among the most cost-efficient investment vehicles available.
Vanguard and Schwab offer growth and value ETFs at 0.04% expense ratios, meaning you pay just $4 per year for every $10,000 invested. iShares Russell ETFs charge 0.18%, which is still low in absolute terms but represents a 4.5x premium over the cheapest alternatives. Over a 20-year investment horizon on a $100,000 investment earning 10% annually, the difference between a 0.04% and 0.18% expense ratio amounts to approximately $3,500 in additional costs for the higher-fee fund.
Tax efficiency is similar across major growth and value ETFs because they all use the in-kind creation and redemption mechanism that minimizes capital gains distributions. Growth ETFs tend to have slightly better tax efficiency because they have lower portfolio turnover (growth stocks that appreciate are held at increasingly large weights, reducing the need to sell). Value ETFs may occasionally distribute more capital gains because rebalancing requires selling stocks that have appreciated into growth territory.
Beyond Large Cap: Small-Cap and Mid-Cap Style ETFs
Style-specific ETFs are also available for small-cap and mid-cap segments, providing more targeted exposure for investors who want to combine style and size factors.
The iShares Russell 2000 Growth ETF (IWO) and iShares Russell 2000 Value ETF (IWN) split the small-cap universe into growth and value components. Small-cap growth ETFs provide exposure to early-stage, high-growth companies that may become tomorrow’s mid-cap and large-cap leaders. Small-cap value ETFs provide exposure to deeply discounted small companies with turnaround potential. The style divergence in small caps can be even more dramatic than in large caps, making this an area where style selection matters significantly.
Mid-cap style ETFs like the iShares Russell Mid-Cap Growth ETF (IWP) and iShares Russell Mid-Cap Value ETF (IWS) offer a middle ground. Mid-cap growth stocks are particularly interesting for growth investors because they represent companies that have proven their business models but still have substantial room for growth, the sweet spot between speculative small caps and mature large caps.
How to Use Growth and Value ETFs in Your Portfolio
For core portfolio construction, a combination of growth and value ETFs provides comprehensive equity exposure with explicit style control. A 60% VUG / 40% VTV allocation gives you growth-tilted exposure to the entire large-cap universe at a blended expense ratio of 0.04%. This is cheaper and more tax-efficient than most total market index funds while giving you the ability to adjust style tilts over time.
For style rotation implementation, growth and value ETFs are the ideal vehicles. Shifting between VUG and VTV based on your rotation model requires minimal trades, incurs low transaction costs, and provides precise style exposure adjustment. The high liquidity of these mega-funds means you can execute large trades without meaningful market impact.
For satellite positions alongside an individual stock portfolio, a value ETF provides the diversified value exposure that complements a growth stock picker’s concentrated growth holdings. If your individual stock portfolio is 100% growth stocks, adding VTV as a 20-30% satellite position provides immediate style diversification without requiring you to develop expertise in value stock analysis.
Growth and value ETFs have democratized style-based investing, providing individual investors with access to the same systematic style exposures that were once available only to institutional investors through custom mandates. By understanding the differences between these products, their performance characteristics, and their role in portfolio construction, you can build a more sophisticated and resilient investment approach at a fraction of the cost of active management.
