Yahoo Finance reported on July 4, 2026, on the performance and structural differences between the Vanguard S&P 500 Growth ETF (VOOG) and the Invesco S&P SmallCap 600 Revenue ETF (RWJ). The analysis highlights a significant divergence in year-to-date returns and assets under management, with VOOG holding a dominant $30.3 billion lead. This comparison underscores a persistent market rotation dynamic between large-cap growth and small-cap value factors.
Context — why this matters now
The current market environment is defined by elevated interest rates, with the 10-year Treasury yield holding above 4.3%. This backdrop creates a classic tension between high-quality growth stocks, which are sensitive to discount rates, and smaller value-oriented companies that often carry higher debt costs. The last major divergence between these styles occurred in 2022, when the S&P 500 Growth index fell 29%, underperforming the S&P SmallCap 600 Value index by roughly 700 basis points during the Fed's initial hiking cycle.
A key catalyst for renewed investor focus is the approaching conclusion of the Federal Reserve's quantitative tightening program, scheduled for mid-2026. This policy shift alters liquidity conditions, which historically impact small-cap stocks more directly due to their reliance on domestic financing. Simultaneously, earnings resilience among mega-cap technology firms continues to concentrate market leadership, forcing allocators to reassess style tilts. The comparison is a proxy for a broader asset allocation decision between momentum and mean reversion.
Data — what the numbers show
Concrete data reveals a stark performance and size gap between the two ETFs. Year-to-date through early July 2026, the Vanguard S&P 500 Growth ETF (VOOG) has returned 12.4%. The Invesco S&P SmallCap 600 Revenue ETF (RWJ) has returned 4.1% over the same period. VOOG's net assets stand at $32.1 billion, compared to RWJ's $1.8 billion.
| Metric | VOOG | RWJ |
|---|
| YTD Return | +12.4% | +4.1% |
| Assets Under Management | $32.1B | $1.8B |
| Expense Ratio | 0.10% | 0.39% |
| Underlying Index | S&P 500 Growth | S&P SmallCap 600 Revenue |
VOOG's portfolio trades at a forward price-to-earnings ratio of 27.5, nearly double the S&P 500's 20.8. RWJ's portfolio carries a P/E of 14.2, reflecting its deep value orientation. The 30-day median bid-ask spread for VOOG is 1 basis point, versus 8 basis points for RWJ, indicating a substantial liquidity differential.
Analysis — what it means for markets / sectors / tickers
The outperformance of VOOG directly benefits its largest holdings, including Microsoft (MSFT), Apple (AAPL), and Nvidia (NVDA), which collectively comprise over 35% of the fund. These companies gain from continued passive inflows that reinforce their market capitalization dominance. RWJ's strategy favors sectors like industrials and consumer discretionary, with top holdings in companies like Abercrombie & Fitch (ANF) and RPM International (RPM). A sustained rotation into RWJ would signal broad-based economic confidence beyond the technology sector.
A critical limitation is that RWJ's revenue-weighted methodology can overexpose the fund to low-margin, cyclical businesses, unlike traditional market-cap weighted small-cap indices. This increases fundamental risk during an economic slowdown. Current positioning data from futures markets shows institutional speculators maintaining a net long bias in Nasdaq-100 futures while holding a neutral stance in Russell 2000 contracts. ETF flow data indicates net weekly inflows into large-cap growth funds have averaged $1.2 billion, versus net outflows of $300 million from small-cap value funds.
Outlook — what to watch next
Two immediate catalysts will test the divergence between these strategies. The July 2026 Consumer Price Index report, due July 15, will influence rate expectations and growth stock valuations. Second-quarter earnings season, beginning July 25, will provide critical data on profit margins for small-cap companies in the RWJ portfolio facing higher input costs.
Key technical levels to monitor include VOOG's 50-day moving average at $485.70, which has acted as support. For RWJ, the $42.50 price level represents a multi-month resistance zone that, if breached, could signal a broader style rotation. If the 10-year Treasury yield breaks sustainably below 4.15%, small-cap stocks like those in RWJ could see a relief rally. Conversely, a yield spike above 4.50% would likely pressure both styles but disproportionately impact small-cap balance sheets.
Frequently Asked Questions
What is the biggest risk of owning the Invesco RWJ ETF?
The primary risk is liquidity and concentration. With $1.8 billion in assets, RWJ is less liquid than giant ETFs, which can widen trading spreads during volatile markets. Its revenue-weighting methodology can lead to heavy exposure to a few sectors, like industrials, making it vulnerable to a single economic narrative. Investors accept higher idiosyncratic risk for the potential of capturing a small-cap value premium, which has been elusive for much of the past decade.
How does Vanguard's VOOG differ from a standard S&P 500 ETF?
VOOG is a subset of the S&P 500, holding only stocks classified as "growth" by S&P Dow Jones Indices. This excludes value-oriented names like Berkshire Hathaway and Exxon Mobil. The growth classification is based on sales growth, earnings change, and momentum. As a result, VOOG is significantly more concentrated in technology and consumer discretionary sectors and trades at a higher valuation multiple than the broad S&P 500 ETF (VOO), which includes both growth and value stocks.
Which ETF is better for hedging against inflation?
Historically, small-cap value strategies like RWJ's have offered better inflation hedging characteristics than large-cap growth. This is because smaller companies often have more pricing power in their niche markets and revenues that can reset more quickly with inflation. However, in a stagflationary environment where the Fed keeps rates high, the higher debt burden of small caps can become a liability. For direct inflation hedging, dedicated instruments like TIPS or commodities often serve as more precise tools than equity style ETFs.
Bottom Line
The $30.3 billion AUM gap underscores a market still paying a premium for the concentrated earnings growth and liquidity of mega-cap leaders over small-cap cyclical value.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
