The Vanguard Small-Cap Index Fund ETF Shares (VB) and the Vanguard Total World Stock Index Fund ETF Shares (VT) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and VT is a Vanguard N/A fund. So, what’s the difference between VB and VT? And which fund is better?
The expense ratio of VB is 0.03 percentage points lower than VT’s (0.05% vs. 0.08%). VB also has a lower exposure to the technology sector and a higher standard deviation. Overall, VB has provided higher returns than VT over the past ten years.
In this article, we’ll compare VB vs. VT. We’ll look at risk metrics and performance, as well as at their annual returns and industry exposure. Moreover, I’ll also discuss VB’s and VT’s holdings, portfolio growth, and fund composition and examine how these affect their overall returns.
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Summary
| VB | VT | |
| Name | Vanguard Small-Cap Index Fund ETF Shares | Vanguard Total World Stock Index Fund ETF Shares |
| Category | Small Blend | N/A |
| Issuer | Vanguard | Vanguard |
| AUM | 137.72B | 30.44B |
| Avg. Return | 14.25% | 10.42% |
| Div. Yield | 1.14% | 1.65% |
| 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 Total World Stock Index Fund ETF Shares (VT) is a N/A fund that is issued by Vanguard. It currently has 30.44B total assets under management and has yielded an average annual return of 10.42% over the past 10 years. The fund has a dividend yield of 1.65% with an expense ratio of 0.08%.
VB’s dividend yield is 0.51% lower than that of VT (1.14% vs. 1.65%). Also, VB yielded on average 3.84% more per year over the past decade (14.25% vs. 10.42%). The expense ratio of VB is 0.03 percentage points lower than VT’s (0.05% vs. 0.08%).
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Fund Composition
Industry Exposure
| VB | VT | |
| Technology | 16.85% | 19.63% |
| Industrials | 16.11% | 10.7% |
| Energy | 3.67% | 3.48% |
| Communication Services | 2.4% | 9.02% |
| Utilities | 2.19% | 2.6% |
| Healthcare | 14.34% | 11.58% |
| Consumer Defensive | 4.14% | 6.71% |
| Real Estate | 9.56% | 3.64% |
| Financial Services | 13.06% | 15.36% |
| Consumer Cyclical | 13.03% | 12.32% |
| Basic Materials | 4.63% | 4.97% |
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 Total World Stock Index Fund ETF Shares (VT) has the most exposure to the Technology sector at 19.63%. This is followed by Financial Services and Consumer Cyclical at 15.36% and 12.32% respectively. Energy (3.48%), Real Estate (3.64%), and Basic Materials (4.97%) only make up 12.09% of the fund’s total assets.
VT’s mid-section with moderate exposure is comprised of Consumer Defensive, Communication Services, Industrials, Healthcare, and Consumer Cyclical stocks at 6.71%, 9.02%, 10.7%, 11.58%, and 12.32%.
VB is 2.78% less exposed to the Technology sector than VT (16.85% vs 19.63%). VB’s exposure to Industrials and Healthcare stocks is 5.41% higher and 2.76% higher respectively (16.11% vs. 10.7% and 14.34% vs. 11.58%). In total, Communication Services, Energy, and Consumer Defensive also make up 9.00% less of the fund’s holdings compared to VT (10.21% vs. 19.21%).
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%.
| VT Holdings | Weight |
| Apple Inc | 2.85% |
| Microsoft Corp | 2.71% |
| Amazon.com Inc | 1.98% |
| Facebook Inc Class A | 1.1% |
| Alphabet Inc Class A | 0.97% |
| Alphabet Inc Class C | 0.95% |
| Tesla Inc | 0.7% |
| NVIDIA Corp | 0.64% |
| JPMorgan Chase & Co | 0.62% |
| Tencent Holdings Ltd | 0.6% |
VT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 2.85%, 2.71%, 1.98%, 1.1%, and 0.97%.
Alphabet Inc Class C (0.95%), Tesla Inc (0.7%), and NVIDIA Corp (0.64%) have a slightly smaller but still significant weight. JPMorgan Chase & Co and Tencent Holdings Ltd are also represented in the VT’s holdings at 0.62% and 0.6%.
Risk Analysis
| VB | VT | |
| Mean Return | 1.15 | 0.9 |
| R-squared | 85.03 | 99.35 |
| Std. Deviation | 17.82 | 14.19 |
| Alpha | -4.02 | 0.2 |
| Beta | 1.21 | 1.01 |
| Sharpe Ratio | 0.74 | 0.71 |
| Treynor Ratio | 10.15 | 9.5 |
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a R-squared of 85.03 with a Alpha of -4.02 and a Sharpe Ratio of 0.74. Its Standard Deviation is 17.82 while VB’s Mean Return is 1.15. Furthermore, the fund has a Treynor Ratio of 10.15 and a Beta of 1.21.
The Vanguard Total World Stock Index Fund ETF Shares (VT) has a Beta of 1.01 with a Treynor Ratio of 9.5 and a Sharpe Ratio of 0.71. Its Alpha is 0.2 while VT’s Mean Return is 0.9. Furthermore, the fund has a Standard Deviation of 14.19 and a R-squared of 99.35.
VB’s Mean Return is 0.25 points higher than that of VT and its R-squared is 14.32 points lower. With a Standard Deviation of 17.82, VB is slightly more volatile than VT. The Alpha and Beta of VB are 4.22 points lower and 0.20 points higher than VT’s Alpha and Beta.
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Performance
Annual Returns
| Year | VB | VT |
| 2020 | 19.08% | 16.74% |
| 2019 | 27.37% | 26.8% |
| 2018 | -9.3% | -9.67% |
| 2017 | 16.24% | 24.19% |
| 2016 | 18.31% | 8.77% |
| 2015 | -3.65% | -1.88% |
| 2014 | 7.51% | 3.97% |
| 2013 | 37.8% | 22.98% |
| 2012 | 18.22% | 17.33% |
| 2011 | -2.68% | -7.71% |
| 2010 | 27.89% | 13.05% |
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 2019 was the strongest year for VT, returning 26.8% on an annual basis. The poorest year for VT in the last ten years was 2018, with a yield of -9.67%. Most years the Vanguard Total World Stock Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 8.77%, 13.05%, and 16.74% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VB | $10,000 | $39,734 | 14.25% |
| VT | $10,000 | $27,739 | 10.42% |
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 VT, the end total would have been $27,739. This equates to a $17,739 profit over 11 years and a compound annual growth rate (CAGR) of 10.42%.
VB’s CAGR is 3.84 percentage points higher than that of VT and as a result, would have yielded $11,995 more on a $10,000 investment. Thus, VB outperformed VT by 3.84% annually.
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