Three Definitions of Growth: SCHG, VOOG and ARKK
August 19, 2026 · 2 min read · by ETFWinner Research
Growth means something different to an index provider than to an active manager, and the gap between those definitions explains wildly different results.
Growth investing sounds like a single style until you compare what the funds hold. An index growth fund and a high-conviction active growth fund can share a category label and almost no companies, because they answer completely different questions about what growth means.
How index growth is defined
Index providers score companies on measurable factors — earnings growth rates, sales growth, price momentum — and split an existing universe into growth and value halves. The consequence is that index growth funds are dominated by large, established, already-successful companies. They are growth by measurement, not growth by story.
SCHG at 0.04% and VOOG at 0.10% both work this way, which is why their holdings look a lot like the top of the broad market.
How active growth differs
ARKK takes the other route: a manager selects companies expected to grow, often before profitability, based on a thesis about technological change. That produces a portfolio of smaller, unprofitable, high-volatility names and a fee of 0.75% against a few basis points for the index versions.
The results diverge accordingly. In the same market, the index growth funds and the active fund can post opposite outcomes — -8.42% against 20.50% — because they are not really in the same asset class.
| Ticker | Fund | Expense | YTD | Yield | AUM |
|---|---|---|---|---|---|
| SCHG | Schwab U.S. Large-Cap Growth ETF | 0.04% | 20.50% | 0.35% | $30B |
| VOOG | Vanguard S&P 500 Growth ETF | 0.10% | 18.50% | 0.55% | $10B |
| ARKK | ARK Innovation ETF | 0.75% | -8.42% | 0.00% | $6.8B |
| QQQ | Invesco QQQ Trust | 0.20% | 15.62% | 0.52% | $295B |
What you are paying for
The index approach gives you a cheap, rules-based tilt towards larger, faster-growing companies. It will never look dramatically different from the market, and it will not blow up spectacularly either.
The active approach offers a genuine chance of enormous outperformance and an equally genuine chance of a drawdown that takes many years to recover from. Neither is wrong. Sizing them identically is.
The overlap warning again
- A large-cap growth index fund overlaps heavily with a broad market fund and with a Nasdaq fund. Owning all three concentrates the same companies three times.
- Growth and value index funds together roughly reconstruct the market — at a higher combined fee than simply owning the market.
- If you want a growth tilt, size it as the difference from market weight, not as the headline position size.
ETFs mentioned in this guide
Schwab U.S. Large-Cap Growth ETF
Vanguard S&P 500 Growth ETF
ARK Innovation ETF
Invesco QQQ Trust
Frequently asked questions
What is the difference between index growth and active growth ETFs?
Index growth funds score existing large companies on measurable growth factors, producing portfolios dominated by established firms. Active growth funds select companies based on a manager's thesis, often smaller and unprofitable ones.
Why is ARKK so volatile compared with SCHG?
It holds a concentrated portfolio of smaller, often unprofitable companies chosen on a forward-looking thesis, while index growth funds hold large, profitable, already-successful businesses.
Do growth ETFs overlap with the Nasdaq?
Heavily. Large-cap growth indices and the Nasdaq index share most of their largest holdings, so owning both increases concentration rather than diversifying.
Is a growth tilt worth the extra fee?
Index growth funds cost only slightly more than broad funds, so the question is whether you want the tilt. Active growth funds cost substantially more and need meaningful outperformance to justify it.