The Vanguard Total Bond Market Index Fund ETF Shares (BND) and the Vanguard Information Technology Index Fund ETF Shares (VGT) are both among the Top 100 ETFs. BND is a Vanguard Intermediate-Term Bond fund and VGT is a Vanguard Technology fund. So, what’s the difference between BND and VGT? And which fund is better?
The expense ratio of BND is 0.07 percentage points lower than VGT’s (0.03% vs. 0.1%). BND is mostly comprised of AAA bonds while VGT has a high exposure to the technology sector. Overall, BND has provided lower returns than VGT over the past ten years.
In this article, we’ll compare BND vs. VGT. We’ll look at risk metrics and performance, as well as at their holdings and fund composition. Moreover, I’ll also discuss BND’s and VGT’s annual returns, industry exposure, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Total Bond Market Index Fund ETF Shares||Vanguard Information Technology Index Fund ETF Shares|
The Vanguard Total Bond Market Index Fund ETF Shares (BND) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 312.15B total assets under management and has yielded an average annual return of 4.09% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.03%.
The Vanguard Information Technology Index Fund ETF Shares (VGT) is a Technology fund that is issued by Vanguard. It currently has 54.13B total assets under management and has yielded an average annual return of 20.84% over the past 10 years. The fund has a dividend yield of 0.66% with an expense ratio of 0.1%.
BND’s dividend yield is 1.36% higher than that of VGT (2.02% vs. 0.66%). Also, BND yielded on average 16.74% less per year over the past decade (4.09% vs. 20.84%). The expense ratio of BND is 0.07 percentage points lower than VGT’s (0.03% vs. 0.1%).
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|BND Bond Sectors||Weight|
BND’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Below B at 68.72%, 16.17%, 11.87%, 3.34%, and 0.01%. The fund is less weighted towards B (0.0%), BB (0.0%), and US Government (0.0%) rated bonds.
|Visa Inc Class A||3.16%|
|PayPal Holdings Inc||2.76%|
|Mastercard Inc Class A||2.76%|
|Cisco Systems Inc||1.9%|
VGT’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 19.58%, 16.53%, 4.22%, 3.16%, and 2.76%.
Mastercard Inc Class A (2.76%), Adobe Inc (2.39%), and Intel Corp (1.94%) have a slightly smaller but still significant weight. Salesforce.com Inc and Cisco Systems Inc are also represented in the VGT’s holdings at 1.91% and 1.9%.
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The Vanguard Total Bond Market Index Fund ETF Shares (BND) has a Treynor Ratio of 2.64 with a Standard Deviation of 3.14 and a R-squared of 99.34. Its Beta is 1.04 while BND’s Mean Return is 0.28. Furthermore, the fund has a Sharpe Ratio of 0.88 and a Alpha of -0.14.
The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Treynor Ratio of 20.55 with a Standard Deviation of 16.61 and a Beta of 1.02. Its R-squared is 74.84 while VGT’s Alpha is 10.41. Furthermore, the fund has a Mean Return of 1.76 and a Sharpe Ratio of 1.23.
BND’s Mean Return is 1.48 points lower than that of VGT and its R-squared is 24.50 points higher. With a Standard Deviation of 3.14, BND is slightly less volatile than VGT. The Alpha and Beta of BND are 10.55 points lower and 0.02 points higher than VGT’s Alpha and Beta.
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BND had its best year in 2019 with an annual return of 8.71%. BND’s worst year over the past decade yielded -2.14% and occurred in 2013. In most years the Vanguard Total Bond Market Index Fund ETF Shares provided moderate returns such as in 2017, 2012, and 2014 where annual returns amounted to 3.62%, 4.04%, and 5.96% respectively.
The year 2019 was the strongest year for VGT, returning 48.68% on an annual basis. The poorest year for VGT in the last ten years was 2011, with a yield of 0.52%. Most years the Vanguard Information Technology Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2014, when gains were 13.73%, 14.05%, and 18.01% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in BND would have resulted in a final balance of $15,456. This is a profit of $5,456 over 11 years and amounts to a compound annual growth rate (CAGR) of 4.09%.
With a $10,000 investment in VGT, the end total would have been $72,718. This equates to a $62,718 profit over 11 years and a compound annual growth rate (CAGR) of 20.84%.
BND’s CAGR is 16.74 percentage points lower than that of VGT and as a result, would have yielded $57,262 less on a $10,000 investment. Thus, BND performed worse than VGT by 16.74% annually.
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