IJR vs. VGT: What’s The Difference?

The iShares Core S&P Small-Cap ETF (IJR) and the Vanguard Information Technology Index Fund ETF Shares (VGT) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and VGT is a Vanguard Technology fund. So, what’s the difference between IJR and VGT? And which fund is better?

The expense ratio of IJR is 0.04 percentage points lower than VGT’s (0.06% vs. 0.1%). IJR also has a higher exposure to the industrials sector and a higher standard deviation. Overall, IJR has provided lower returns than VGT over the past ten years.

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

Summary

IJR VGT
Name iShares Core S&P Small-Cap ETF Vanguard Information Technology Index Fund ETF Shares
Category Small Blend Technology
Issuer iShares Vanguard
AUM 68.64B 54.13B
Avg. Return 13.97% 20.84%
Div. Yield 0.96% 0.66%
Expense Ratio 0.06% 0.1%

The iShares Core S&P Small-Cap ETF (IJR) is a Small Blend fund that is issued by iShares. It currently has 68.64B total assets under management and has yielded an average annual return of 13.97% over the past 10 years. The fund has a dividend yield of 0.96% with an expense ratio of 0.06%.

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%.

IJR’s dividend yield is 0.30% higher than that of VGT (0.96% vs. 0.66%). Also, IJR yielded on average 6.87% less per year over the past decade (13.97% vs. 20.84%). The expense ratio of IJR is 0.04 percentage points lower than VGT’s (0.06% vs. 0.1%).

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Fund Composition

Industry Exposure

IJR vs. VGT - Industry Exposure

IJR VGT
Technology 14.32% 88.89%
Industrials 17.31% 1.67%
Energy 4.0% 0.0%
Communication Services 2.59% 0.61%
Utilities 1.8% 0.0%
Healthcare 11.55% 0.0%
Consumer Defensive 4.01% 0.0%
Real Estate 9.55% 0.0%
Financial Services 15.91% 8.83%
Consumer Cyclical 13.61% 0.0%
Basic Materials 5.34% 0.0%

The iShares Core S&P Small-Cap ETF (IJR) has the most exposure to the Industrials sector at 17.31%. This is followed by Financial Services and Technology at 15.91% and 14.32% respectively. Communication Services (2.59%), Energy (4.0%), and Consumer Defensive (4.01%) only make up 10.60% of the fund’s total assets.

IJR’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Consumer Cyclical, and Technology stocks at 5.34%, 9.55%, 11.55%, 13.61%, and 14.32%.

The Vanguard Information Technology Index Fund ETF Shares (VGT) has the most exposure to the Technology sector at 88.89%. This is followed by Financial Services and Industrials at 8.83% and 1.67% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.

VGT’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Energy, Communication Services, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.61%, and 1.67%.

IJR is 15.64% more exposed to the Industrials sector than VGT (17.31% vs 1.67%). IJR’s exposure to Financial Services and Technology stocks is 7.08% higher and 74.57% lower respectively (15.91% vs. 8.83% and 14.32% vs. 88.89%). In total, Communication Services, Energy, and Consumer Defensive also make up 9.99% more of the fund’s holdings compared to VGT (10.60% vs. 0.61%).

Holdings

IJR - Holdings

IJR Holdings Weight
BlackRock Cash Funds Treasury SL Agency 1.08%
GameStop Corp Class A 0.86%
Omnicell Inc 0.61%
Stamps.com Inc 0.58%
Saia Inc 0.57%
Power Integrations Inc 0.57%
Exponent Inc 0.54%
NeoGenomics Inc 0.53%
Chart Industries Inc 0.53%
Macy’s Inc 0.51%

IJR’s Top Holdings are BlackRock Cash Funds Treasury SL Agency, GameStop Corp Class A, Omnicell Inc, Stamps.com Inc, and Saia Inc at 1.08%, 0.86%, 0.61%, 0.58%, and 0.57%.

Power Integrations Inc (0.57%), Exponent Inc (0.54%), and NeoGenomics Inc (0.53%) have a slightly smaller but still significant weight. Chart Industries Inc and Macy’s Inc are also represented in the IJR’s holdings at 0.53% and 0.51%.

VGT - Holdings

VGT Holdings Weight
Apple Inc 19.58%
Microsoft Corp 16.53%
NVIDIA Corp 4.22%
Visa Inc Class A 3.16%
PayPal Holdings Inc 2.76%
Mastercard Inc Class A 2.76%
Adobe Inc 2.39%
Intel Corp 1.94%
Salesforce.com Inc 1.91%
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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Risk Analysis

IJR VGT
Mean Return 1.21 1.76
R-squared 76.03 74.84
Std. Deviation 18.68 16.61
Alpha -3.7 10.41
Beta 1.2 1.02
Sharpe Ratio 0.74 1.23
Treynor Ratio 10.77 20.55

The iShares Core S&P Small-Cap ETF (IJR) has a Alpha of -3.7 with a Mean Return of 1.21 and a Standard Deviation of 18.68. Its R-squared is 76.03 while IJR’s Treynor Ratio is 10.77. Furthermore, the fund has a Beta of 1.2 and a Sharpe Ratio of 0.74.

The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Sharpe Ratio of 1.23 with a Treynor Ratio of 20.55 and a Beta of 1.02. Its Standard Deviation is 16.61 while VGT’s R-squared is 74.84. Furthermore, the fund has a Mean Return of 1.76 and a Alpha of 10.41.

IJR’s Mean Return is 0.55 points lower than that of VGT and its R-squared is 1.19 points higher. With a Standard Deviation of 18.68, IJR is slightly more volatile than VGT. The Alpha and Beta of IJR are 14.11 points lower and 0.18 points higher than VGT’s Alpha and Beta.

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Performance

Annual Returns

IJR vs. VGT - Annual Returns

Year IJR VGT
2020 11.24% 45.94%
2019 22.79% 48.68%
2018 -8.43% 2.52%
2017 13.2% 37.07%
2016 26.49% 13.73%
2015 -2.0% 5.02%
2014 5.67% 18.01%
2013 41.36% 30.91%
2012 16.28% 14.05%
2011 0.9% 0.52%
2010 26.14% 12.74%

IJR had its best year in 2013 with an annual return of 41.36%. IJR’s worst year over the past decade yielded -8.43% and occurred in 2018. In most years the iShares Core S&P Small-Cap ETF provided moderate returns such as in 2020, 2017, and 2012 where annual returns amounted to 11.24%, 13.2%, and 16.28% 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.

Portfolio Growth

IJR vs. VGT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IJR $10,000 $38,800 13.97%
VGT $10,000 $72,718 20.84%

A $10,000 investment in IJR would have resulted in a final balance of $38,800. This is a profit of $28,800 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.97%.

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%.

IJR’s CAGR is 6.87 percentage points lower than that of VGT and as a result, would have yielded $33,918 less on a $10,000 investment. Thus, IJR performed worse than VGT by 6.87% annually.


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