Three of the most popular large-cap growth exchange-traded funds (ETFs) in the United States hold the same household names and charge nearly identical annual fees.
Despite their similar growth-focused strategies, the Vanguard Growth ETF (VUG), Schwab U.S. Large-Cap Growth ETF (SCHG), and SPDR Portfolio S&P 500 Growth ETF (SPYG) track different indexes, and that has translated into a 35-percentage-point gap in returns over the past 10 years, according to data compiled by 24/7 Wall St.
Past returns and fees are two things investors consider when choosing a growth fund, but Morningstar’s latest research points to a third factor that could matter even more.
The research shows the behavioral cost of chasing recent winners is far greater than what any of these three funds charge annually.
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SCHG trailed over one year but dominated the full decade
SPYG tracks the S&P 500 Growth Index, which selects companies based on their growth and value characteristics. Some stocks can be split between the index’s growth and value segments, according to the 24/7 Wall St. analysis.
The fund returned about 20% over the one-year period ending in September 2026, approximately 98% over five years, and about 420% over the past decade.
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SCHG tracks the Dow Jones U.S. Large-Cap Growth Total Stock Market Index, which draws from a broader pool of stocks than the S&P 500 alone. Although its one-year return lagged behind those of its peers, SCHG delivered the strongest 10-year performance, gaining approximately 455%.
VUG tracks the CRSP US Large Cap Growth Index and has the lowest expense ratio of the three funds at 0.03% annually. SCHG and SPYG each charge 0.04%. However, VUG’s lower fee did not translate into the strongest long-term return. It gained approximately 421% over the decade, slightly ahead of SPYG but behind SCHG.
VUG’s portfolio is also heavily concentrated in a handful of major technology and growth companies. As of August 2026, NVIDIA accounted for 13.62% of the fund, followed by Apple at 12.48%, Microsoft at 10.11%, and Alphabet at 5.34%, according to Vanguard.
Together, these four stocks represented roughly 41.5% of VUG’s assets, meaning one bad quarter from any of them would ripple across more than 40% of the fund.
Morningstar data exposes the hidden cost of chasing last year’s winner
Morningstar’s 2026 Mind the Gap study suggests that the biggest threat to investor returns may not appear on any fact sheet.
The research, authored by Morningstar’s Managing Director Jeffrey Ptak, found that the average dollar invested in U.S. mutual funds and ETFs earned 8.7% per year over the decade ending December 2025, about 1.2 percentage points less than the funds returned each year.
Investors buying after strong runs and selling during downturns drove the shortfall, which wiped out an estimated $3.8 trillion in potential gains across the fund universe.
Large-growth funds, the category that includes VUG, SCHG, and SPYG, posted the highest total returns of any major equity group at 15.9% per year over the decade, the Morningstar study found.
Investors in those same funds captured only about 15.0% annually, leaving a 0.8-percentage-point shortfall caused by mistimed purchases and sales.
4 megacaps may already dominate your portfolio
Owning several funds does not guarantee a diversified portfolio, J.P. Morgan Wealth Management cautioned in an August 2026 analysis. The firm warned that owning several funds can still leave investors heavily exposed to the same stocks, creating what it called a diversification illusion.
The Magnificent 7 represented 31.7% of the S&P 500’s market capitalization by the close of 2025, the J.P. Morgan report noted. Any cap-weighted index fund already has substantial exposure to those names before an investor adds a growth ETF.
Jeffrey Ptak, managing director at Morningstar, told Wealth Management that the shortfall deserves more attention than most investors give.
<strong>One of the things we try to underscore as a potential lesson is that it’s a persistent cost. People should approach that in a way that’s not unlike how they approach fund expense ratios</strong>.
An investor who pairs an S&P 500 index fund with VUG or SCHG may find that Nvidia, Apple, Microsoft, and Alphabet account for a far larger share of the portfolio’s total value than any single prospectus would suggest.
The overlap widens for anyone also holding technology-sector ETFs or target-date funds.
How concentration data reframes the VUG, SCHG, and SPYG decision
Morningstar’s study found that investors in broadly diversified funds kept more of the returns their investments earned than those in more narrowly focused funds. The study linked this difference to steadier cash flows and less frequent trading.
The finding suggests investors should look beyond a fund’s past returns and consider the concentration of their portfolio, as J.P. Morgan’s analysis highlights.
J.P. Morgan recommends reviewing the portfolio as a whole, checking whether top holdings repeat across funds and accounts, and rebalancing with a set rule when allocations drift from target exposures.
When comparing VUG, SCHG, and SPYG, the big differences in returns and the tiny gap in fees tend to grab attention.
But Morningstar’s data and J.P. Morgan’s research suggest that what matters most over the long term is how much these ETFs overlap in their top holdings, since that can have a bigger impact on your portfolio’s performance and risk.
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