The Vanguard Small-Cap Index Fund ETF Shares (VB) and the Vanguard FTSE Europe Index Fund ETF Shares (VGK) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and VGK is a Vanguard Europe Stock fund. So, what’s the difference between VB and VGK? And which fund is better?
The expense ratio of VB is 0.03 percentage points lower than VGK’s (0.05% vs. 0.08%). VB also has a higher exposure to the technology sector and a higher standard deviation. Overall, VB has provided higher returns than VGK over the past ten years.
In this article, we’ll compare VB vs. VGK. We’ll look at holdings and annual returns, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss VB’s and VGK’s performance, portfolio growth, and fund composition and examine how these affect their overall returns.
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Summary
| VB | VGK | |
| Name | Vanguard Small-Cap Index Fund ETF Shares | Vanguard FTSE Europe Index Fund ETF Shares |
| Category | Small Blend | Europe Stock |
| Issuer | Vanguard | Vanguard |
| AUM | 137.72B | 25.7B |
| Avg. Return | 14.25% | 6.68% |
| Div. Yield | 1.14% | 2.52% |
| Expense Ratio | 0.05% | 0.08% |
The Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.05%.
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%.
VB’s dividend yield is 1.38% lower than that of VGK (1.14% vs. 2.52%). Also, VB yielded on average 7.57% more per year over the past decade (14.25% vs. 6.68%). The expense ratio of VB is 0.03 percentage points lower than VGK’s (0.05% vs. 0.08%).
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Fund Composition
Industry Exposure
| VB | VGK | |
| Technology | 16.85% | 8.3% |
| Industrials | 16.11% | 15.58% |
| Energy | 3.67% | 4.3% |
| Communication Services | 2.4% | 5.09% |
| Utilities | 2.19% | 3.89% |
| Healthcare | 14.34% | 13.76% |
| Consumer Defensive | 4.14% | 11.39% |
| Real Estate | 9.56% | 2.57% |
| Financial Services | 13.06% | 15.85% |
| Consumer Cyclical | 13.03% | 11.6% |
| Basic Materials | 4.63% | 7.67% |
The Vanguard Small-Cap Index Fund ETF Shares (VB) has the most exposure to the Technology sector at 16.85%. This is followed by Industrials and Healthcare at 16.11% and 14.34% respectively. Communication Services (2.4%), Energy (3.67%), and Consumer Defensive (4.14%) only make up 10.21% of the fund’s total assets.
VB’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Healthcare stocks at 4.63%, 9.56%, 13.03%, 13.06%, and 14.34%.
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%.
VB is 8.55% more exposed to the Technology sector than VGK (16.85% vs 8.3%). VB’s exposure to Industrials and Healthcare stocks is 0.53% higher and 0.58% higher respectively (16.11% vs. 15.58% and 14.34% vs. 13.76%). In total, Communication Services, Energy, and Consumer Defensive also make up 10.57% less of the fund’s holdings compared to VGK (10.21% vs. 20.78%).
Holdings
| VB Holdings | Weight |
| Charles River Laboratories International Inc | 0.34% |
| Pool Corp | 0.32% |
| Bio-Techne Corp | 0.32% |
| Avantor Inc | 0.32% |
| PerkinElmer Inc | 0.31% |
| Diamondback Energy Inc | 0.31% |
| VICI Properties Inc Ordinary Shares | 0.3% |
| IDEX Corp | 0.3% |
| Entegris Inc | 0.3% |
| Novavax Inc | 0.29% |
VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.
Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.
| 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%.
Risk Analysis
| VB | VGK | |
| Mean Return | 1.15 | 0.61 |
| R-squared | 85.03 | 92.76 |
| Std. Deviation | 17.82 | 16.65 |
| Alpha | -4.02 | 0.45 |
| Beta | 1.21 | 1.06 |
| Sharpe Ratio | 0.74 | 0.4 |
| Treynor Ratio | 10.15 | 5.12 |
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Standard Deviation of 17.82 with a Mean Return of 1.15 and a Alpha of -4.02. Its Beta is 1.21 while VB’s Treynor Ratio is 10.15. Furthermore, the fund has a R-squared of 85.03 and a Sharpe Ratio of 0.74.
The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Treynor Ratio of 5.12 with a R-squared of 92.76 and a Standard Deviation of 16.65. Its Beta is 1.06 while VGK’s Alpha is 0.45. Furthermore, the fund has a Sharpe Ratio of 0.4 and a Mean Return of 0.61.
VB’s Mean Return is 0.54 points higher than that of VGK and its R-squared is 7.73 points lower. With a Standard Deviation of 17.82, VB is slightly more volatile than VGK. The Alpha and Beta of VB are 4.47 points lower and 0.15 points higher than VGK’s Alpha and Beta.
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Performance
Annual Returns
| Year | VB | VGK |
| 2020 | 19.08% | 6.5% |
| 2019 | 27.37% | 24.26% |
| 2018 | -9.3% | -14.79% |
| 2017 | 16.24% | 27.06% |
| 2016 | 18.31% | -0.59% |
| 2015 | -3.65% | -1.87% |
| 2014 | 7.51% | -6.56% |
| 2013 | 37.8% | 24.93% |
| 2012 | 18.22% | 21.01% |
| 2011 | -2.68% | -11.49% |
| 2010 | 27.89% | 5.01% |
VB had its best year in 2013 with an annual return of 37.8%. VB’s worst year over the past decade yielded -9.3% and occurred in 2018. In most years the Vanguard Small-Cap Index Fund ETF Shares provided moderate returns such as in 2017, 2012, and 2016 where annual returns amounted to 16.24%, 18.22%, and 18.31% 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
| Fund | Initial Balance | Final Balance | CAGR |
| VB | $10,000 | $39,734 | 14.25% |
| VGK | $10,000 | $18,350 | 6.68% |
A $10,000 investment in VB would have resulted in a final balance of $39,734. This is a profit of $29,734 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.25%.
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%.
VB’s CAGR is 7.57 percentage points higher than that of VGK and as a result, would have yielded $21,384 more on a $10,000 investment. Thus, VB outperformed VGK by 7.57% annually.
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