Vanguard Growth Index Fund
- Jun 17
- 7 min read
FUND DUE DILIGENCE REPORT Vanguard Growth Index Fund Investor Shares (VIGRX) Prepared: June 15, 2026 |
| Key Findings • 19.29% total return for FY2025; 17.30% annualized over 10 years • Ultra-low 0.17% expense ratio — minimal cost drag on returns • Passive full-replication; benchmark tracking near zero (Beta 1.00, R2 1.00) • AUM $393.8B — institutional-grade liquidity and scale • Caution: Technology concentration 65-70%; Q1 2026 benchmark fell -10.39% |
$393.8B Total AUM | 0.17% Expense Ratio | 19.29% FY2025 Return | 17.30% 10-Yr Ann. | 1992 Inception |
1. Executive Summary
Vanguard Growth Index Fund (VIGRX) is a passively managed index fund seeking to track the CRSP US Large Cap Growth Index. With $393.8 billion in total assets, it is one of the largest growth equity funds globally, offering institutional-quality exposure to large-cap US growth stocks at an exceptionally low cost. This report evaluates VIGRX across strategy, performance, risk, fees, and portfolio fit for high-net-worth investors.
Strategy
VIGRX employs a full-replication passive indexing approach, holding all 154 constituents of the CRSP US Large Cap Growth Index in proportion to their index weights. There is no active security selection, no macro-overlay, and no attempt to outperform the benchmark. The fund remains fully invested at all times. Performance is entirely driven by index composition, notably a 65-70% allocation to Technology.
Performance
The fund delivered 19.29% in FY2025 (vs. benchmark 19.48%), 14.48% over 5 years, and 17.30% over 10 years. Tracking error against the primary benchmark is near zero. Q1 2026 was challenging: the benchmark fell -10.39% as tech and healthcare sold off. YTD 2026 (through June 12) stands at +10.23%, suggesting meaningful recovery. The fund has outpaced the broad Dow Jones US Total Stock Market Index by more than 3 percentage points annually over 10 years.
Risks
The primary risk is sector concentration: Technology represents approximately 65-70% of the portfolio. This creates asymmetric downside in tech corrections, as evidenced by the -33.22% return in 2022 and the Q1 2026 drawdown. The top 5 holdings (NVDA, AAPL, MSFT, GOOGL, AVGO) account for roughly 45% of assets. Tariff sensitivity is notable, as many top holdings are global businesses with significant international revenue.
Fees & Tax
The expense ratio of 0.17% is among the lowest available for any large-cap growth fund. Turnover was 12% in FY2025, implying minimal tax drag. However, embedded unrealized gains of 56.98% of NAV create a latent tax liability for new taxable account investors.
2. Fund Profile & Philosophy
Fund Facts
Fund Name | Vanguard Growth Index Fund — Investor Shares (VIGRX) |
Firm | The Vanguard Group, Inc. (est. 1975, Malvern, PA) |
Inception Date | November 2, 1992 |
Total AUM | $393.8 billion (as of May 31, 2026) |
Share Class AUM | $494.0 million (VIGRX Investor Shares) |
Benchmark | CRSP US Large Cap Growth Index |
Fund Number | 0009 | CUSIP: 922908504 |
Expense Ratio | 0.17% (net and gross — no fee waivers) |
Purchase / Redeem Fee | None |
Minimum Investment | N/A (available to Vanguard funds-of-funds and select retirement plan clients) |
Dividend Schedule | Quarterly (March, June, September, December) |
Fiscal Year-End | December 31 |
Status | Closed to new direct investors; available via recordkeeping/intermediaries |
Investment Mandate & Philosophy
VIGRX seeks to track the performance of the CRSP US Large Cap Growth Index, a float-adjusted market-cap weighted index representing the growth style for companies in the top 85% of US investable market capitalization (approximately 150 constituents as of December 31, 2025). The fund uses a full-replication approach.
Vanguard's investment philosophy is rooted in passive, low-cost investing. Its cooperative ownership structure (owned by the funds it manages, which are in turn owned by shareholders) aligns incentives to minimize costs rather than maximize firm profits. This produces some of the lowest expense ratios in the industry.
3. Team & Firm-Level Overview
Portfolio Managers
Manager | Aaron Choi, CFA |
Role | Portfolio Manager, Vanguard Portfolio Management (VPM) |
Tenure on Fund | Since 2025 |
Experience | With Vanguard since 2011; investment management since 2015 |
Education | B.S., Pennsylvania State University |
Manager | Jena Stenger, CFA |
Role | Portfolio Manager, Vanguard Portfolio Management (VPM) |
Tenure on Fund | Since 2025 |
Experience | With Vanguard since 2015; investment management since 2013 |
Education | B.S., Villanova University; M.B.A., University of Chicago Booth School of Business |
Firm & Ownership Structure
Vanguard is the world's second-largest asset manager with approximately $9.9 trillion in AUM (as of December 31, 2025). Vanguard Portfolio Management (VPM), a wholly owned subsidiary established in 2025, houses the equity index management team. The Strategic Equity Index Management team within VPM manages all US equity index funds, employing sophisticated portfolio construction and efficient trading strategies to minimize tracking error net of expenses.
4. Investment Process
Security Selection
VIGRX uses full replication: it holds all 154-155 constituents of the CRSP US Large Cap Growth Index in proportion to their index weights. There is no qualitative security selection, no analyst ratings, and no discretionary overweights or underweights. The index provider (CRSP) determines constituents based on growth factor scores; the fund mirrors those decisions. CRSP rebalances the index quarterly.
Portfolio Construction Overview
Process Element | Approach | Assessment |
Security Selection | Full index replication | Rules-based; no discretion |
Position Sizing | Market-cap weighted per index | Top 5 = ~45% of fund |
Sell Discipline | Index deletions only | No active exit criteria |
Macro / Thematic Inputs | None — passive only | Expected for index fund |
ESG Integration | Not stated; not integrated | No ESG tilt |
Derivatives Use | Permitted for cash equitization | Limited, risk-reducing |
5. Performance Analysis
Total Returns vs. Benchmark
| YTD Jun '26 | 1-Year | 3-Year Ann. | 5-Year Ann. | 10-Year Ann. |
VIGRX (NAV) | 10.23% | 30.40% | 27.09% | 15.19% | 18.24%* |
CRSP US LG Growth Index | 10.30% | 30.61% | 27.30% | 15.37% | 18.44%* |
Tracking Difference | -0.07% | -0.21% | -0.21% | -0.18% | -0.20%* |
DJ US Total Mkt (Broad) | N/A | 17.05% | N/A | 13.07% | 14.21% |
Annual Returns History (VIGRX Investor Shares)
2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
5.99% | 27.65% | -3.46% | 37.08% | 40.01% | 27.10% | -33.22% | 46.60% | 32.50% | 19.29% |
After-Tax Returns (FY2025)
Metric | 1-Year | 5-Year | 10-Year |
Return Before Taxes | 19.29% | 14.48% | 17.30% |
After Taxes on Distributions | 19.20% | 14.37% | 17.09% |
After Taxes on Distributions & Sale | 11.47% | 11.63% | 14.73% |
6. Risk Analysis
Risk & Volatility Measures (3-Year, as of May 31, 2026)
Measure | VIGRX vs. Primary Benchmark | VIGRX vs. Broad Benchmark |
Alpha | -0.01 | 0.05 |
Beta | 1.00 | 1.17 |
R-Squared | 1.00 | 0.87 |
Information Ratio | -18.26 | 0.57 |
Expense Ratio (Cost Drag) | 0.17% | 0.17% |
Note: Negative information ratio vs. primary benchmark is expected for a passive fund — it will always slightly underperform its benchmark net of fees. The 0.57 information ratio vs. the broad market reflects the fund's consistent risk-adjusted outperformance of the total market index.
Sector Exposure — Shift Over Time
Sector | Jun 2025 | Dec 2025 | May 2026 | Trend |
Technology | 60.4% | 65.8% | 69.6% | Rising |
Consumer Discretionary | 18.8% | 16.0% | 14.6% | Declining |
Industrials | 8.9% | 7.3% | 6.9% | Declining |
Health Care | 5.4% | 5.5% | 4.5% | Stable/Slight Decline |
Financials | 2.9% | 2.4% | 1.4% | Declining |
Top 10 Holdings (as of May 31, 2026)
Holding | % of Fund | Sub-Industry |
NVIDIA Corp (NVDA) | 13.10% | Semiconductors |
Apple Inc (AAPL) | 12.31% | Technology Hardware |
Microsoft Corp (MSFT) | 8.99% | Systems Software |
Alphabet Inc (GOOGL) | 5.95% | Interactive Media & Services |
Broadcom Inc (AVGO) | 5.16% | Semiconductors |
Amazon.com Inc (AMZN) | 4.85% | Broadline Retail |
Alphabet Inc (GOOG) | 4.68% | Interactive Media & Services |
Meta Platforms Inc (META) | 3.73% | Interactive Media & Services |
Tesla Inc (TSLA) | 3.31% | Automobile Manufacturers |
Eli Lilly & Co (LLY) | 2.53% | Pharmaceuticals |
Top 5 holdings represent approximately 45.5% of fund assets. Top 10 represent approximately 64.6%.
Tariff & Geopolitical Resilience
Risk Factor | Assessment | VIGRX Sensitivity |
Direct Foreign Holdings | 0.17% foreign holdings | Very Low |
Foreign Revenue Exposure | Top holdings ~50-60% international revenue | Moderate-High |
China Trade Risk | NVDA, AAPL significant China exposure | High |
Currency Risk | Minimal — US-listed securities | Low |
7. Costs & Tax Efficiency
Fee Structure
Expense Ratio (Gross & Net) | 0.17% — no fee waivers or reimbursements |
Annual Cost per $10,000 | $17 (per prospectus illustration) |
Purchase Fee | None |
Redemption Fee | None |
Account Service Fee | $25/year for accounts below $5,000,000 (if applicable) |
Portfolio Turnover (FY2025) | 12% — moderate for a passive large-cap fund |
Turnover (H1 2025) | 5% annualized — elevated in H2 2025 |
Total Advisory Fees (FY2025) | $6.139 million (on approximately $352B+ AUM base) |
Unrealized Gains of NAV | $157.68 per share (56.98%) — as of May 31, 2026 |
Realized Gain (YTD 2026) | -$12.49 (-4.51%) — small realized loss year to date |
Tax Cost Ratio (Approx.) | ~0.09% (1-year pre vs. post-distribution difference) |
Distribution Type | Income only (quarterly). No capital gains distributions in recent 5 years. |
After-Tax 10-Year Return | 17.09% (distributions only), 14.73% (distributions + sale) |
The fund has not distributed capital gains in the five-year history shown, suggesting efficient portfolio management. Low turnover (12%) limits taxable trading events. However, the large unrealized gain position is a latent tax liability that new investors must weigh carefully when establishing positions in taxable accounts.
8. Comparative Peer Analysis
Peer Fund Comparison
| VIGRX | IVW (iShares) | SPYG (SPDR) | FBGRX (Fidelity) |
Strategy | Passive CRSP LG Growth | Passive S&P 500 Growth | Passive S&P 500 Growth | Active Growth |
AUM | $393.8B | ~$50B | ~$35B | ~$18B |
Expense Ratio | 0.17% | 0.18% | 0.04% | ~0.68% |
10-Yr Ann. Return | 17.30% | ~16% | ~16% | ~17-19% |
Manager Risk | None (passive) | None (passive) | None (passive) | High (active) |
Tax Efficiency | High (mutual fund) | Highest (ETF) | Highest (ETF) | Moderate |
Holdings Count | ~154 | ~230 | ~230 | ~150-200 |
Note: IVW and SPYG are ETFs and offer superior tax efficiency through in-kind redemption. Peer expense ratios and returns are approximate. FBGRX is included as an active comparison.
How VIGRX Stands Out
• Scale: $393.8B AUM dwarfs all peers — superior liquidity for large institutional trades and minimal market impact
• Cost: 0.17% is competitive with passive ETF peers and far below any active growth fund
• Index breadth: CRSP US Large Cap Growth (~150 stocks) vs. S&P 500 Growth (~230 stocks) — more concentrated mega-cap exposure with higher return potential and higher risk
• Mutual fund structure: No intraday trading risk, but lacks the in-kind ETF redemption tax advantage — VUG (ETF equivalent) may be preferred for large taxable accounts
• Vanguard ownership structure: Unique cost discipline that has historically kept fees flat or declining, unlike publicly owned competitors
9. Suitability for Client Portfolio
Taxable Portfolio Fit
Consideration | Assessment for HNW Taxable Portfolio |
Embedded Capital Gains | 56.98% of NAV unrealized — entry timing matters; staggered purchase recommended |
Distribution Tax Drag | Very low — quarterly income only (~0.37% yield); no capital gains distributions in 5 years |
Turnover / Trading Tax | 12% turnover = minimal realized gains from trading; passive approach limits taxable events |
ETF Alternative | VUG (Vanguard Growth ETF) offers same exposure with superior tax efficiency via in-kind redemption — preferred for large taxable accounts |
Tax-Loss Harvesting | Limited near-term opportunity given the substantial unrealized gain position; plan for long holding period |
Role in Asset Allocation
Role | Commentary |
Core Equity Holding | Excellent — provides systematic, low-cost exposure to large-cap US growth; complements value tilts and international equity |
Diversification Tool | Limited — 70% Technology; pairs poorly with other tech-heavy funds; needs value/international counterweight |
Satellite / Tactical | Not recommended — passive structure and full-investment mandate make it unsuitable for tactical allocation |
Income Generation | Not appropriate — 0.37% SEC yield; growth funds reinvest earnings rather than distributing them |
Investor Alignment
• Long time horizon (10+ years): Strongly aligned — 17.30% 10-year annualized return rewards patient capital despite periods of severe drawdown
• Risk tolerance: Suitable for moderate-to-aggressive investors only; the -33.22% return in 2022 and Q1 2026 correction require strong behavioral discipline
• Tax sensitivity: Consider VUG ETF for large taxable positions; VIGRX is appropriate for tax-deferred accounts without restriction
• Portfolio size: $393.8B AUM means no liquidity concerns even for very large institutional allocations
• ESG considerations: Not ESG-screened; unsuitable for clients with explicit ESG mandates
