The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. VBK is a Vanguard Small Growth fund and TLT is a iShares Long Government fund. So, what’s the difference between VBK and TLT? And which fund is better?
The expense ratio of VBK is 0.08 percentage points lower than TLT’s (0.07% vs. 0.15%). VBK also has a high exposure to the technology sector while TLT is mostly comprised of AAA bonds. Overall, VBK has provided higher returns than TLT over the past 11 years.
In this article, we’ll compare VBK vs. TLT. We’ll look at risk metrics and industry exposure, as well as at their performance and portfolio growth. Moreover, I’ll also discuss VBK’s and TLT’s fund composition, annual returns, and holdings and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Growth Index Fund ETF Shares||iShares 20+ Year Treasury Bond ETF|
|Category||Small Growth||Long Government|
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%.
The iShares 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.
VBK’s dividend yield is 1.05% lower than that of TLT (0.45% vs. 1.5%). Also, VBK yielded on average 7.53% more per year over the past decade (16.53% vs. 9.00%). The expense ratio of VBK is 0.08 percentage points lower than TLT’s (0.07% vs. 0.15%).
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|Charles River Laboratories International Inc||0.78%|
|Fair Isaac Corp||0.57%|
|Bill.com Holdings Inc Ordinary Shares||0.56%|
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%.
|TLT Bond Sectors||Weight|
TLT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
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The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Standard Deviation of 17.95 with a Treynor Ratio of 11.18 and a Mean Return of 1.22. Its Sharpe Ratio is 0.78 while VBK’s Beta is 1.18. Furthermore, the fund has a R-squared of 80.56 and a Alpha of -2.81.
The iShares 20+ Year Treasury Bond ETF (TLT) has a R-squared of 68.76 with a Beta of 3.54 and a Sharpe Ratio of 0.55. Its Treynor Ratio is 1.82 while TLT’s Mean Return is 0.63. Furthermore, the fund has a Standard Deviation of 12.76 and a Alpha of -2.83.
VBK’s Mean Return is 0.59 points higher than that of TLT and its R-squared is 11.80 points higher. With a Standard Deviation of 17.95, VBK is slightly more volatile than TLT. The Alpha and Beta of VBK are 0.02 points higher and 2.36 points lower than TLT’s Alpha and Beta.
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VBK had its best year in 2013 with an annual return of 38.18%. VBK’s worst year over the past decade yielded -5.68% and occurred in 2018. In most years the Vanguard Small-Cap Growth Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2017 where annual returns amounted to 10.74%, 17.67%, and 21.9% respectively.
The year 2011 was the strongest year for TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VBK would have resulted in a final balance of $48,639. This is a profit of $38,639 over 11 years and amounts to a compound annual growth rate (CAGR) of 16.53%.
With a $10,000 investment in TLT, the end total would have been $23,809. This equates to a $13,809 profit over 11 years and a compound annual growth rate (CAGR) of 9.00%.
VBK’s CAGR is 7.53 percentage points higher than that of TLT and as a result, would have yielded $24,830 more on a $10,000 investment. Thus, VBK outperformed TLT by 7.53% annually.
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