VEA vs. VGT: What’s The Difference?

The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) and the Vanguard Information Technology Index Fund ETF Shares (VGT) are both among the Top 100 ETFs. VEA is a Vanguard Foreign Large Blend fund and VGT is a Vanguard Technology fund. So, what’s the difference between VEA and VGT? And which fund is better?

The expense ratio of VEA is 0.05 percentage points lower than VGT’s (0.05% vs. 0.1%). VEA also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VEA has provided lower returns than VGT over the past ten years.

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

Summary

VEA VGT
Name Vanguard FTSE Developed Markets Index Fund ETF Shares Vanguard Information Technology Index Fund ETF Shares
Category Foreign Large Blend Technology
Issuer Vanguard Vanguard
AUM 157.48B 54.13B
Avg. Return 7.05% 20.84%
Div. Yield 2.49% 0.66%
Expense Ratio 0.05% 0.1%

The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 157.48B total assets under management and has yielded an average annual return of 7.05% over the past 10 years. The fund has a dividend yield of 2.49% with an expense ratio of 0.05%.

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%.

VEA’s dividend yield is 1.83% higher than that of VGT (2.49% vs. 0.66%). Also, VEA yielded on average 13.79% less per year over the past decade (7.05% vs. 20.84%). The expense ratio of VEA is 0.05 percentage points lower than VGT’s (0.05% vs. 0.1%).

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Fund Composition

Industry Exposure

VEA vs. VGT - Industry Exposure

VEA VGT
Technology 11.67% 88.89%
Industrials 15.47% 1.67%
Energy 4.17% 0.0%
Communication Services 5.41% 0.61%
Utilities 3.1% 0.0%
Healthcare 10.6% 0.0%
Consumer Defensive 8.61% 0.0%
Real Estate 4.04% 0.0%
Financial Services 17.39% 8.83%
Consumer Cyclical 11.31% 0.0%
Basic Materials 8.24% 0.0%

The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) has the most exposure to the Financial Services sector at 17.39%. This is followed by Industrials and Technology at 15.47% and 11.67% respectively. Real Estate (4.04%), Energy (4.17%), and Communication Services (5.41%) only make up 13.62% of the fund’s total assets.

VEA’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Healthcare, Consumer Cyclical, and Technology stocks at 8.24%, 8.61%, 10.6%, 11.31%, and 11.67%.

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%.

VEA is 8.56% more exposed to the Financial Services sector than VGT (17.39% vs 8.83%). VEA’s exposure to Industrials and Technology stocks is 13.80% higher and 77.22% lower respectively (15.47% vs. 1.67% and 11.67% vs. 88.89%). In total, Real Estate, Energy, and Communication Services also make up 13.01% more of the fund’s holdings compared to VGT (13.62% vs. 0.61%).

Holdings

VEA - Holdings

VEA Holdings Weight
Nestle SA 1.5%
Samsung Electronics Co Ltd 1.4%
ASML Holding NV 1.16%
Roche Holding AG 1.1%
Toyota Motor Corp 0.92%
LVMH Moet Hennessy Louis Vuitton SE 0.84%
Novartis AG 0.82%
Shopify Inc A 0.7%
AstraZeneca PLC 0.67%
SAP SE 0.66%

VEA’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.5%, 1.4%, 1.16%, 1.1%, and 0.92%.

LVMH Moet Hennessy Louis Vuitton SE (0.84%), Novartis AG (0.82%), and Shopify Inc A (0.7%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the VEA’s holdings at 0.67% and 0.66%.

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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Performance

Annual Returns

VEA vs. VGT - Annual Returns

Year VEA VGT
2020 10.29% 45.94%
2019 22.08% 48.68%
2018 -14.47% 2.52%
2017 26.44% 37.07%
2016 2.51% 13.73%
2015 -0.21% 5.02%
2014 -5.71% 18.01%
2013 22.12% 30.91%
2012 18.6% 14.05%
2011 -12.57% 0.52%
2010 8.47% 12.74%

VEA had its best year in 2017 with an annual return of 26.44%. VEA’s worst year over the past decade yielded -14.47% and occurred in 2018. In most years the Vanguard FTSE Developed Markets Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 2.51%, 8.47%, and 10.29% 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

VEA vs. VGT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VEA $10,000 $19,290 7.05%
VGT $10,000 $72,718 20.84%

A $10,000 investment in VEA would have resulted in a final balance of $19,290. This is a profit of $9,290 over 11 years and amounts to a compound annual growth rate (CAGR) of 7.05%.

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%.

VEA’s CAGR is 13.79 percentage points lower than that of VGT and as a result, would have yielded $53,428 less on a $10,000 investment. Thus, VEA performed worse than VGT by 13.79% annually.


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