DGRO vs. VHT: What’s The Difference?

The iShares Core Dividend Growth ETF (DGRO) and the Vanguard Health Care Index Fund ETF Shares (VHT) are both among the Top 100 ETFs. DGRO is a iShares Large Value fund and VHT is a Vanguard Health fund. So, what’s the difference between DGRO and VHT? And which fund is better?

The expense ratio of DGRO is 0.02 percentage points lower than VHT’s (0.08% vs. 0.1%). DGRO also has a higher exposure to the technology sector and a lower standard deviation. Overall, DGRO has provided lower returns than VHT over the past 6 years.

In this article, we’ll compare DGRO vs. VHT. We’ll look at holdings and fund composition, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss DGRO’s and VHT’s risk metrics, performance, and industry exposure and examine how these affect their overall returns.

Summary

DGRO VHT
Name iShares Core Dividend Growth ETF Vanguard Health Care Index Fund ETF Shares
Category Large Value Health
Issuer iShares Vanguard
AUM 20B 17.94B
Avg. Return 12.46% 16.04%
Div. Yield 2.04% 1.15%
Expense Ratio 0.08% 0.1%

The iShares Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.

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%.

DGRO’s dividend yield is 0.89% higher than that of VHT (2.04% vs. 1.15%). Also, DGRO yielded on average 3.58% less per year over the past decade (12.46% vs. 16.04%). The expense ratio of DGRO is 0.02 percentage points lower than VHT’s (0.08% vs. 0.1%).

Fund Composition

Industry Exposure

DGRO vs. VHT - Industry Exposure

DGRO VHT
Technology 18.98% 0.05%
Industrials 12.52% 0.05%
Energy 0.11% 0.0%
Communication Services 4.53% 0.0%
Utilities 7.34% 0.0%
Healthcare 17.55% 99.57%
Consumer Defensive 10.24% 0.0%
Real Estate 0.0% 0.0%
Financial Services 18.47% 0.02%
Consumer Cyclical 7.42% 0.0%
Basic Materials 2.83% 0.31%

The iShares Core Dividend Growth ETF (DGRO) has the most exposure to the Technology sector at 18.98%. This is followed by Financial Services and Healthcare at 18.47% and 17.55% respectively. Energy (0.11%), Basic Materials (2.83%), and Communication Services (4.53%) only make up 7.47% of the fund’s total assets.

DGRO’s mid-section with moderate exposure is comprised of Utilities, Consumer Cyclical, Consumer Defensive, Industrials, and Healthcare stocks at 7.34%, 7.42%, 10.24%, 12.52%, and 17.55%.

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%.

DGRO is 18.93% more exposed to the Technology sector than VHT (18.98% vs 0.05%). DGRO’s exposure to Financial Services and Healthcare stocks is 18.45% higher and 82.02% lower respectively (18.47% vs. 0.02% and 17.55% vs. 99.57%). In total, Energy, Basic Materials, and Communication Services also make up 7.16% more of the fund’s holdings compared to VHT (7.47% vs. 0.31%).

Holdings

DGRO - Holdings

DGRO Holdings Weight
Microsoft Corp 3.29%
Apple Inc 3.26%
Pfizer Inc 2.89%
Johnson & Johnson 2.87%
Procter & Gamble Co 2.79%
Verizon Communications Inc 2.68%
JPMorgan Chase & Co 2.57%
The Home Depot Inc 2.35%
Merck & Co Inc 2.11%
Cisco Systems Inc 1.98%

DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.

Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.

VHT - Holdings

VHT Holdings Weight
Johnson & Johnson 7.34%
UnitedHealth Group Inc 6.44%
Pfizer Inc 3.7%
Abbott Laboratories 3.48%
Thermo Fisher Scientific Inc 3.37%
AbbVie Inc 3.37%
Merck & Co Inc 3.33%
Eli Lilly and Co 3.17%
Danaher Corp 2.91%
Medtronic PLC 2.83%

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%.

Risk Analysis

DGRO VHT
Mean Return 0 1.33
R-squared 0 59.86
Std. Deviation 0 13.58
Alpha 0 7.99
Beta 0 0.75
Sharpe Ratio 0 1.13
Treynor Ratio 0 20.74

The iShares Core Dividend Growth ETF (DGRO) has a Mean Return of 0 with a R-squared of 0 and a Alpha of 0. Its Sharpe Ratio is 0 while DGRO’s Standard Deviation is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Beta of 0.

The Vanguard Health Care Index Fund ETF Shares (VHT) has a Alpha of 7.99 with a Mean Return of 1.33 and a R-squared of 59.86. Its Treynor Ratio is 20.74 while VHT’s Beta is 0.75. Furthermore, the fund has a Sharpe Ratio of 1.13 and a Standard Deviation of 13.58.

DGRO’s Mean Return is 1.33 points lower than that of VHT and its R-squared is 59.86 points lower. With a Standard Deviation of 0, DGRO is slightly less volatile than VHT. The Alpha and Beta of DGRO are 7.99 points lower and 0.75 points lower than VHT’s Alpha and Beta.

Performance

Annual Returns

DGRO vs. VHT - Annual Returns

Year DGRO VHT
2020 9.47% 18.21%
2019 30.02% 21.97%
2018 -2.24% 5.55%
2017 22.84% 23.34%
2016 15.27% -3.33%
2015 -0.62% 7.22%
2014 0.0% 25.38%
2013 0.0% 42.67%
2012 0.0% 19.1%
2011 0.0% 10.57%
2010 0.0% 5.75%

DGRO had its best year in 2019 with an annual return of 30.02%. DGRO’s worst year over the past decade yielded -2.24% and occurred in 2018. In most years the iShares Core Dividend Growth ETF provided moderate returns such as in 2012, 2011, and 2010 where annual returns amounted to 0.0%, 0.0%, and 0.0% 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.

Portfolio Growth

DGRO vs. VHT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
DGRO $10,000 $19,580 12.46%
VHT $10,000 $19,455 16.04%

A $10,000 investment in DGRO would have resulted in a final balance of $19,580. This is a profit of $9,580 over 6 years and amounts to a compound annual growth rate (CAGR) of 12.46%.

With a $10,000 investment in VHT, the end total would have been $19,455. This equates to a $9,455 profit over 6 years and a compound annual growth rate (CAGR) of 16.04%.

DGRO’s CAGR is 3.58 percentage points lower than that of VHT and as a result, would have yielded $125 more on a $10,000 investment. Thus, DGRO performed worse than VHT by 3.58% annually.


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