VUAG vs VUSA: Summary

*This is the fund’s annual fee, also known as the Total Expense Ratio (TER) or Ongoing Charges Figure (OCF). Data as of 27 June 2025.
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What are the differences between VUAG and VUSA?

Exploring the best way to invest in the S&P 500 index? Two names are likely to come up: VUAG vs VUSA. Both are exchange-traded funds (ETFs), a type of investment fund that holds a collection of assets, like stocks or bonds. ETFs are also traded on stock exchanges, just like individual shares. 

VUAG and VUSA are ETFs providing exposure to 500 of the largest US companies. They offer a way to diversify your portfolio through a single investment. And while they may look the same on the surface, there are a few important distinctions to make between them.
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1. Dividends

The biggest difference between both ETFs is how they handle dividends.

VUAG automatically reinvests dividends it earns. That means instead of paying them out to you, it puts the money back into the fund, buying more shares on your behalf. This makes it an accumulating ETF, which can be especially helpful if you’re investing for the long run.

VUSA is a distributing ETF, which means it pays out dividends to you in cash. This is useful if you’re looking to generate income and use it right away, such as during retirement.

‍💡 For a roundup of other top dividend stocks, check out our guide of the top five dividend payers for 2025.
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2. Performance 

It might seem tempting to just take the dividends as cash with a distributing ETF, like VUSA.

But if you’re investing for the long-run with an accumulating ETF, such as VUAG, you can benefit from the power of compounding.

Source: FE Fundinfo as at 22 April 2025. Basis: in local currency terms with income reinvested.

If you opt for VUSA and then reinvest your dividends on your own time, then the performance of VUSA and VUGA ends up being very close.‍

💡 Although you buy these ETFs in GBP, they’re priced in USD, so exchange rate fluctuations can impact your returns. 
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3. Tax implications

UK investors can earn up to £500 in dividend income tax-free during the 2025/26 tax year (6 April 2025 to 5 April 2026). Anything above that threshold may be subject to income tax, depending on your tax band and whether the investment is inside or outside a tax wrapper (like an ISA or SIPP.)

VUSA – Distributing ETF

• Pays dividends in cash, usually quarterly
• Inside an ISA or SIPP: dividends are tax-free
• Outside an ISA or SIPP: dividends could count towards your £500 allowance or be taxed at your marginal income tax rate

VUAG – Accumulating ETF

• Does not pay out dividends, instead reinvests income back into the fund
• Inside an ISA or SIPP: no taxes due on dividends
• Outside an ISA or SIPP: the reinvested dividends (known as Excess Reportable Income (ERI) may still be taxable)

‍💡 Make sure you’re staying on top of the tax rules, with these five tax traps to avoid in 2025.
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What are the top holdings?

Because VUSA and VUAG aim to track the performance of the S&P 500, they have the same top holdings.

Source: Vanguard S&P 500 UCITS ETF (VUSA) and S&P 500 UCITS ETF (VUAG) data, retrieved 27 June 2025. 

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Which S&P 500 ETF should I choose?

Choosing between VUAG and VUSA depends on your personal goals, tax situation, and investment style.

Reasons to choose VUAG

• You’re focused on long-term wealth growth and want compound returns.
• You want to avoid taxes on dividend payments outside of a tax wrapper.
• You want to average out your investing costs over time with dollar cost averaging.

Reasons to choose VUSA

• You want to receive dividend payments directly — for example, to supplement income.
• You prefer to decide how to reinvest your cash flow.
• You may want to sell your investment in the short-to-medium term.

Remember, this isn’t investment advice. It’s a guide to help you better understand the options so you can make a decision that works best for you.

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How to invest in the S&P 500

Investing in VUAG or VUSA is the same as investing in another stock, ETF, trust, or bond.

Here’s how to get started:

1. Choose which ETF you’d like to invest in.
2. Find a broker or stock trading app that offers them.
3. Open a brokerage account with that company.
4. Deposit funds into your account.
5. Use the funds to buy the ETF(s) that you want to invest in.

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Important information