IAU vs. VBK: What’s The Difference?

The iShares Gold Trust (IAU) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. IAU is a iShares N/A fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between IAU and VBK? And which fund is better?

The expense ratio of IAU is 0.18 percentage points higher than VBK’s (0.25% vs. 0.07%). IAU also has a lower exposure to the technology sector and a lower standard deviation. Overall, IAU has provided lower returns than VBK over the past 11 years.

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

Summary

IAU VBK
Name iShares Gold Trust Vanguard Small-Cap Growth Index Fund ETF Shares
Category N/A Small Growth
Issuer iShares Vanguard
AUM 28.61B 37.89B
Avg. Return 6.03% 16.53%
Div. Yield 0.0% 0.45%
Expense Ratio 0.25% 0.07%

The iShares Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.

IAU’s dividend yield is 0.45% lower than that of VBK (0.0% vs. 0.45%). Also, IAU yielded on average 10.50% less per year over the past decade (6.03% vs. 16.53%). The expense ratio of IAU is 0.18 percentage points higher than VBK’s (0.25% vs. 0.07%).

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Fund Composition

Industry Exposure

IAU vs. VBK - Industry Exposure

IAU VBK
Technology 0.0% 27.87%
Industrials 0.0% 13.19%
Energy 0.0% 1.77%
Communication Services 0.0% 3.24%
Utilities 0.0% 0.32%
Healthcare 0.0% 23.24%
Consumer Defensive 0.0% 3.83%
Real Estate 0.0% 7.87%
Financial Services 0.0% 4.05%
Consumer Cyclical 0.0% 12.13%
Basic Materials 0.0% 2.49%

The iShares Gold Trust (IAU) has the most exposure to the Technology sector at 0.0%. This is followed by Industrials and Energy at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.

IAU’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Energy stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.

VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.

IAU is 27.87% less exposed to the Technology sector than VBK (0.0% vs 27.87%). IAU’s exposure to Industrials and Energy stocks is 13.19% lower and 1.77% lower respectively (0.0% vs. 13.19% and 0.0% vs. 1.77%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 24.05% less of the fund’s holdings compared to VBK (0.00% vs. 24.05%).

Holdings

IAU - Holdings

IAU Holdings Weight
Gold 100.0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%

IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.

N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.

VBK - Holdings

VBK Holdings Weight
Charles River Laboratories International Inc 0.78%
Pool Corp 0.73%
Bio-Techne Corp 0.73%
Avantor Inc 0.73%
PerkinElmer Inc 0.72%
Entegris Inc 0.7%
PTC Inc 0.62%
Fair Isaac Corp 0.57%
Bill.com Holdings Inc Ordinary Shares 0.56%
Avalara Inc 0.55%

VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.

Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.

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Risk Analysis

IAU VBK
Mean Return 0.23 1.22
R-squared 16.03 80.56
Std. Deviation 16.97 17.95
Alpha 4.16 -2.81
Beta 0.48 1.18
Sharpe Ratio 0.13 0.78
Treynor Ratio 1.5 11.18

The iShares Gold Trust (IAU) has a Mean Return of 0.23 with a R-squared of 16.03 and a Standard Deviation of 16.97. Its Alpha is 4.16 while IAU’s Treynor Ratio is 1.5. Furthermore, the fund has a Beta of 0.48 and a Sharpe Ratio of 0.13.

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a R-squared of 80.56 with a Standard Deviation of 17.95 and a Mean Return of 1.22. Its Beta is 1.18 while VBK’s Sharpe Ratio is 0.78. Furthermore, the fund has a Alpha of -2.81 and a Treynor Ratio of 11.18.

IAU’s Mean Return is 0.99 points lower than that of VBK and its R-squared is 64.53 points lower. With a Standard Deviation of 16.97, IAU is slightly less volatile than VBK. The Alpha and Beta of IAU are 6.97 points higher and 0.70 points lower than VBK’s Alpha and Beta.

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Performance

Annual Returns

IAU vs. VBK - Annual Returns

Year IAU VBK
2020 23.86% 35.29%
2019 18.54% 32.75%
2018 -1.39% -5.68%
2017 11.58% 21.9%
2016 8.85% 10.74%
2015 -11.65% -2.51%
2014 -0.44% 4.02%
2013 -27.96% 38.18%
2012 8.37% 17.67%
2011 8.66% -1.43%
2010 27.93% 30.87%

IAU had its best year in 2010 with an annual return of 27.93%. IAU’s worst year over the past decade yielded -27.96% and occurred in 2013. In most years the iShares Gold Trust provided moderate returns such as in 2012, 2011, and 2016 where annual returns amounted to 8.37%, 8.66%, and 8.85% respectively.

The year 2013 was the strongest year for VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.

Portfolio Growth

IAU vs. VBK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IAU $10,000 $16,786 6.03%
VBK $10,000 $48,639 16.53%

A $10,000 investment in IAU would have resulted in a final balance of $16,786. This is a profit of $6,786 over 11 years and amounts to a compound annual growth rate (CAGR) of 6.03%.

With a $10,000 investment in VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.

IAU’s CAGR is 10.50 percentage points lower than that of VBK and as a result, would have yielded $31,853 less on a $10,000 investment. Thus, IAU performed worse than VBK by 10.50% annually.


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