IAU vs. VGK: What’s The Difference?

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

The expense ratio of IAU is 0.17 percentage points higher than VGK’s (0.25% vs. 0.08%). IAU also has a lower exposure to the technology sector and a higher standard deviation. Overall, IAU has provided lower returns than VGK over the past 11 years.

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

Summary

IAU VGK
Name iShares Gold Trust Vanguard FTSE Europe Index Fund ETF Shares
Category N/A Europe Stock
Issuer iShares Vanguard
AUM 28.61B 25.7B
Avg. Return 6.03% 6.68%
Div. Yield 0.0% 2.52%
Expense Ratio 0.25% 0.08%

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 FTSE Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% with an expense ratio of 0.08%.

IAU’s dividend yield is 2.52% lower than that of VGK (0.0% vs. 2.52%). Also, IAU yielded on average 0.65% less per year over the past decade (6.03% vs. 6.68%). The expense ratio of IAU is 0.17 percentage points higher than VGK’s (0.25% vs. 0.08%).

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Fund Composition

Industry Exposure

IAU vs. VGK - Industry Exposure

IAU VGK
Technology 0.0% 8.3%
Industrials 0.0% 15.58%
Energy 0.0% 4.3%
Communication Services 0.0% 5.09%
Utilities 0.0% 3.89%
Healthcare 0.0% 13.76%
Consumer Defensive 0.0% 11.39%
Real Estate 0.0% 2.57%
Financial Services 0.0% 15.85%
Consumer Cyclical 0.0% 11.6%
Basic Materials 0.0% 7.67%

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 FTSE Europe Index Fund ETF Shares (VGK) has the most exposure to the Financial Services sector at 15.85%. This is followed by Industrials and Healthcare at 15.58% and 13.76% respectively. Utilities (3.89%), Energy (4.3%), and Communication Services (5.09%) only make up 13.28% of the fund’s total assets.

VGK’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.67%, 8.3%, 11.39%, 11.6%, and 13.76%.

IAU is 8.30% less exposed to the Technology sector than VGK (0.0% vs 8.3%). IAU’s exposure to Industrials and Energy stocks is 15.58% lower and 4.30% lower respectively (0.0% vs. 15.58% and 0.0% vs. 4.3%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 30.02% less of the fund’s holdings compared to VGK (0.00% vs. 30.02%).

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%.

VGK - Holdings

VGK Holdings Weight
Nestle SA 2.82%
ASML Holding NV 2.2%
Roche Holding AG 2.13%
LVMH Moet Hennessy Louis Vuitton SE 1.58%
Novartis AG 1.55%
AstraZeneca PLC 1.27%
SAP SE 1.25%
Unilever PLC 1.23%
Novo Nordisk A/S B 1.09%
Siemens AG 0.96%

VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.

AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.

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Risk Analysis

IAU VGK
Mean Return 0.23 0.61
R-squared 16.03 92.76
Std. Deviation 16.97 16.65
Alpha 4.16 0.45
Beta 0.48 1.06
Sharpe Ratio 0.13 0.4
Treynor Ratio 1.5 5.12

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

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Alpha of 0.45 with a Standard Deviation of 16.65 and a Sharpe Ratio of 0.4. Its R-squared is 92.76 while VGK’s Beta is 1.06. Furthermore, the fund has a Mean Return of 0.61 and a Treynor Ratio of 5.12.

IAU’s Mean Return is 0.38 points lower than that of VGK and its R-squared is 76.73 points lower. With a Standard Deviation of 16.97, IAU is slightly more volatile than VGK. The Alpha and Beta of IAU are 3.71 points higher and 0.58 points lower than VGK’s Alpha and Beta.

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Performance

Annual Returns

IAU vs. VGK - Annual Returns

Year IAU VGK
2020 23.86% 6.5%
2019 18.54% 24.26%
2018 -1.39% -14.79%
2017 11.58% 27.06%
2016 8.85% -0.59%
2015 -11.65% -1.87%
2014 -0.44% -6.56%
2013 -27.96% 24.93%
2012 8.37% 21.01%
2011 8.66% -11.49%
2010 27.93% 5.01%

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 2017 was the strongest year for VGK, returning 27.06% on an annual basis. The poorest year for VGK in the last ten years was 2018, with a yield of -14.79%. Most years the Vanguard FTSE Europe Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were -0.59%, 5.01%, and 6.5% respectively.

Portfolio Growth

IAU vs. VGK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IAU $10,000 $16,786 6.03%
VGK $10,000 $18,350 6.68%

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 VGK, the end total would have been $18,350. This equates to a $8,350 profit over 11 years and a compound annual growth rate (CAGR) of 6.68%.

IAU’s CAGR is 0.65 percentage points lower than that of VGK and as a result, would have yielded $1,564 less on a $10,000 investment. Thus, IAU performed worse than VGK by 0.65% annually.


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