The iShares MSCI ACWI ETF (ACWI) and the Vanguard Health Care Index Fund ETF Shares (VHT) are both among the Top 100 ETFs. ACWI is a iShares N/A fund and VHT is a Vanguard Health fund. So, what’s the difference between ACWI and VHT? And which fund is better?
The expense ratio of ACWI is 0.22 percentage points higher than VHT’s (0.32% vs. 0.1%). ACWI also has a higher exposure to the technology sector and a higher standard deviation. Overall, ACWI has provided lower returns than VHT over the past 11 years.
In this article, we’ll compare ACWI vs. VHT. We’ll look at holdings and risk metrics, as well as at their fund composition and performance. Moreover, I’ll also discuss ACWI’s and VHT’s portfolio growth, industry exposure, and annual returns and examine how these affect their overall returns.
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|Name||iShares MSCI ACWI ETF||Vanguard Health Care Index Fund ETF Shares|
The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.
The Vanguard Health Care Index Fund ETF Shares (VHT) is a Health fund that is issued by Vanguard. It currently has 17.94B total assets under management and has yielded an average annual return of 16.04% over the past 10 years. The fund has a dividend yield of 1.15% with an expense ratio of 0.1%.
ACWI’s dividend yield is 0.24% higher than that of VHT (1.39% vs. 1.15%). Also, ACWI yielded on average 5.82% less per year over the past decade (10.21% vs. 16.04%). The expense ratio of ACWI is 0.22 percentage points higher than VHT’s (0.32% vs. 0.1%).
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The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.
ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.
The Vanguard Health Care Index Fund ETF Shares (VHT) has the most exposure to the Healthcare sector at 99.57%. This is followed by Basic Materials and Technology at 0.31% and 0.05% respectively. Real Estate (0.0%), Consumer Defensive (0.0%), and Utilities (0.0%) only make up 0.00% of the fund’s total assets.
VHT’s mid-section with moderate exposure is comprised of Communication Services, Energy, Financial Services, Industrials, and Technology stocks at 0.0%, 0.0%, 0.02%, 0.05%, and 0.05%.
ACWI is 20.36% more exposed to the Technology sector than VHT (20.41% vs 0.05%). ACWI’s exposure to Financial Services and Consumer Cyclical stocks is 15.56% higher and 12.01% higher respectively (15.58% vs. 0.02% and 12.01% vs. 0.0%). In total, Real Estate, Energy, and Basic Materials also make up 10.65% more of the fund’s holdings compared to VHT (10.96% vs. 0.31%).
|Facebook Inc A||1.25%|
|Alphabet Inc Class C||1.12%|
|Alphabet Inc A||1.09%|
|Taiwan Semiconductor Manufacturing Co Ltd||0.79%|
|JPMorgan Chase & Co||0.71%|
ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.
Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.
|Johnson & Johnson||7.34%|
|UnitedHealth Group Inc||6.44%|
|Thermo Fisher Scientific Inc||3.37%|
|Merck & Co Inc||3.33%|
|Eli Lilly and Co||3.17%|
VHT’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and Thermo Fisher Scientific Inc at 7.34%, 6.44%, 3.7%, 3.48%, and 3.37%.
AbbVie Inc (3.37%), Merck & Co Inc (3.33%), and Eli Lilly and Co (3.17%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the VHT’s holdings at 2.91% and 2.83%.
The iShares MSCI ACWI ETF (ACWI) has a Alpha of 0.15 with a R-squared of 99.96 and a Beta of 1. Its Sharpe Ratio is 0.71 while ACWI’s Mean Return is 0.89. Furthermore, the fund has a Standard Deviation of 14.05 and a Treynor Ratio of 9.45.
The Vanguard Health Care Index Fund ETF Shares (VHT) has a Beta of 0.75 with a Mean Return of 1.33 and a Standard Deviation of 13.58. Its Alpha is 7.99 while VHT’s R-squared is 59.86. Furthermore, the fund has a Sharpe Ratio of 1.13 and a Treynor Ratio of 20.74.
ACWI’s Mean Return is 0.44 points lower than that of VHT and its R-squared is 40.10 points higher. With a Standard Deviation of 14.05, ACWI is slightly more volatile than VHT. The Alpha and Beta of ACWI are 7.84 points lower and 0.25 points higher than VHT’s Alpha and Beta.
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ACWI had its best year in 2019 with an annual return of 26.7%. ACWI’s worst year over the past decade yielded -9.15% and occurred in 2018. In most years the iShares MSCI ACWI ETF provided moderate returns such as in 2016, 2010, and 2012 where annual returns amounted to 8.22%, 12.31%, and 15.99% respectively.
The year 2013 was the strongest year for VHT, returning 42.67% on an annual basis. The poorest year for VHT in the last ten years was 2016, with a yield of -3.33%. Most years the Vanguard Health Care Index Fund ETF Shares has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 10.57%, 18.21%, and 19.1% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in ACWI would have resulted in a final balance of $27,241. This is a profit of $17,241 over 11 years and amounts to a compound annual growth rate (CAGR) of 10.21%.
With a $10,000 investment in VHT, the end total would have been $48,464. This equates to a $38,464 profit over 11 years and a compound annual growth rate (CAGR) of 16.04%.
ACWI’s CAGR is 5.82 percentage points lower than that of VHT and as a result, would have yielded $21,223 less on a $10,000 investment. Thus, ACWI performed worse than VHT by 5.82% annually.
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