The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) and the Vanguard Health Care Index Fund ETF Shares (VHT) are both among the Top 100 ETFs. VBK is a Vanguard Small Growth fund and VHT is a Vanguard Health fund. So, what’s the difference between VBK and VHT? And which fund is better?
The expense ratio of VBK is 0.03 percentage points lower than VHT’s (0.07% vs. 0.1%). VBK also has a higher exposure to the technology sector and a higher standard deviation. Overall, VBK has provided higher returns than VHT over the past 11 years.
In this article, we’ll compare VBK vs. VHT. We’ll look at holdings and performance, as well as at their annual returns and industry exposure. Moreover, I’ll also discuss VBK’s and VHT’s portfolio growth, fund composition, and risk metrics and examine how these affect their overall returns.
Summary
| VBK | VHT | |
| Name | Vanguard Small-Cap Growth Index Fund ETF Shares | Vanguard Health Care Index Fund ETF Shares |
| Category | Small Growth | Health |
| Issuer | Vanguard | Vanguard |
| AUM | 37.89B | 17.94B |
| Avg. Return | 16.53% | 16.04% |
| Div. Yield | 0.45% | 1.15% |
| Expense Ratio | 0.07% | 0.1% |
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 Vanguard Health Care Index Fund ETF Shares (VHT) is a Health fund that is issued by Vanguard. It currently has 17.94B total assets under management and has yielded an average annual return of 16.04% over the past 10 years. The fund has a dividend yield of 1.15% with an expense ratio of 0.1%.
VBK’s dividend yield is 0.70% lower than that of VHT (0.45% vs. 1.15%). Also, VBK yielded on average 0.49% more per year over the past decade (16.53% vs. 16.04%). The expense ratio of VBK is 0.03 percentage points lower than VHT’s (0.07% vs. 0.1%).
Fund Composition
Industry Exposure
| VBK | VHT | |
| Technology | 27.87% | 0.05% |
| Industrials | 13.19% | 0.05% |
| Energy | 1.77% | 0.0% |
| Communication Services | 3.24% | 0.0% |
| Utilities | 0.32% | 0.0% |
| Healthcare | 23.24% | 99.57% |
| Consumer Defensive | 3.83% | 0.0% |
| Real Estate | 7.87% | 0.0% |
| Financial Services | 4.05% | 0.02% |
| Consumer Cyclical | 12.13% | 0.0% |
| Basic Materials | 2.49% | 0.31% |
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.
VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.
The Vanguard Health Care Index Fund ETF Shares (VHT) has the most exposure to the Healthcare sector at 99.57%. This is followed by Basic Materials and Technology at 0.31% and 0.05% respectively. Real Estate (0.0%), Consumer Defensive (0.0%), and Utilities (0.0%) only make up 0.00% of the fund’s total assets.
VHT’s mid-section with moderate exposure is comprised of Communication Services, Energy, Financial Services, Industrials, and Technology stocks at 0.0%, 0.0%, 0.02%, 0.05%, and 0.05%.
VBK is 27.82% more exposed to the Technology sector than VHT (27.87% vs 0.05%). VBK’s exposure to Healthcare and Industrials stocks is 76.33% lower and 13.14% higher respectively (23.24% vs. 99.57% and 13.19% vs. 0.05%). In total, Energy, Basic Materials, and Communication Services also make up 7.19% more of the fund’s holdings compared to VHT (7.50% vs. 0.31%).
Holdings
| VBK Holdings | Weight |
| Charles River Laboratories International Inc | 0.78% |
| Pool Corp | 0.73% |
| Bio-Techne Corp | 0.73% |
| Avantor Inc | 0.73% |
| PerkinElmer Inc | 0.72% |
| Entegris Inc | 0.7% |
| PTC Inc | 0.62% |
| Fair Isaac Corp | 0.57% |
| Bill.com Holdings Inc Ordinary Shares | 0.56% |
| Avalara Inc | 0.55% |
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%.
| VHT Holdings | Weight |
| Johnson & Johnson | 7.34% |
| UnitedHealth Group Inc | 6.44% |
| Pfizer Inc | 3.7% |
| Abbott Laboratories | 3.48% |
| Thermo Fisher Scientific Inc | 3.37% |
| AbbVie Inc | 3.37% |
| Merck & Co Inc | 3.33% |
| Eli Lilly and Co | 3.17% |
| Danaher Corp | 2.91% |
| Medtronic PLC | 2.83% |
VHT’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and Thermo Fisher Scientific Inc at 7.34%, 6.44%, 3.7%, 3.48%, and 3.37%.
AbbVie Inc (3.37%), Merck & Co Inc (3.33%), and Eli Lilly and Co (3.17%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the VHT’s holdings at 2.91% and 2.83%.
Risk Analysis
| VBK | VHT | |
| Mean Return | 1.22 | 1.33 |
| R-squared | 80.56 | 59.86 |
| Std. Deviation | 17.95 | 13.58 |
| Alpha | -2.81 | 7.99 |
| Beta | 1.18 | 0.75 |
| Sharpe Ratio | 0.78 | 1.13 |
| Treynor Ratio | 11.18 | 20.74 |
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Beta of 1.18 with a Sharpe Ratio of 0.78 and a Alpha of -2.81. Its Mean Return is 1.22 while VBK’s Treynor Ratio is 11.18. Furthermore, the fund has a Standard Deviation of 17.95 and a R-squared of 80.56.
The Vanguard Health Care Index Fund ETF Shares (VHT) has a Sharpe Ratio of 1.13 with a Treynor Ratio of 20.74 and a Mean Return of 1.33. Its Standard Deviation is 13.58 while VHT’s Alpha is 7.99. Furthermore, the fund has a R-squared of 59.86 and a Beta of 0.75.
VBK’s Mean Return is 0.11 points lower than that of VHT and its R-squared is 20.70 points higher. With a Standard Deviation of 17.95, VBK is slightly more volatile than VHT. The Alpha and Beta of VBK are 10.80 points lower and 0.43 points higher than VHT’s Alpha and Beta.
Performance
Annual Returns
| Year | VBK | VHT |
| 2020 | 35.29% | 18.21% |
| 2019 | 32.75% | 21.97% |
| 2018 | -5.68% | 5.55% |
| 2017 | 21.9% | 23.34% |
| 2016 | 10.74% | -3.33% |
| 2015 | -2.51% | 7.22% |
| 2014 | 4.02% | 25.38% |
| 2013 | 38.18% | 42.67% |
| 2012 | 17.67% | 19.1% |
| 2011 | -1.43% | 10.57% |
| 2010 | 30.87% | 5.75% |
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 2013 was the strongest year for VHT, returning 42.67% on an annual basis. The poorest year for VHT in the last ten years was 2016, with a yield of -3.33%. Most years the Vanguard Health Care Index Fund ETF Shares has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 10.57%, 18.21%, and 19.1% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VBK | $10,000 | $48,639 | 16.53% |
| VHT | $10,000 | $48,464 | 16.04% |
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 VHT, the end total would have been $48,464. This equates to a $38,464 profit over 11 years and a compound annual growth rate (CAGR) of 16.04%.
VBK’s CAGR is 0.49 percentage points higher than that of VHT and as a result, would have yielded $175 more on a $10,000 investment. Thus, VBK outperformed VHT by 0.49% annually.
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