The Vanguard FTSE Europe Index Fund ETF Shares (VGK) and the Vanguard Health Care Index Fund ETF Shares (VHT) are both among the Top 100 ETFs. VGK is a Vanguard Europe Stock fund and VHT is a Vanguard Health fund. So, what’s the difference between VGK and VHT? And which fund is better?
The expense ratio of VGK is 0.02 percentage points lower than VHT’s (0.08% vs. 0.1%). VGK also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VGK has provided lower returns than VHT over the past 11 years.
In this article, we’ll compare VGK vs. VHT. We’ll look at fund composition and portfolio growth, as well as at their performance and annual returns. Moreover, I’ll also discuss VGK’s and VHT’s holdings, risk metrics, and industry exposure and examine how these affect their overall returns.
Summary
| VGK | VHT | |
| Name | Vanguard FTSE Europe Index Fund ETF Shares | Vanguard Health Care Index Fund ETF Shares |
| Category | Europe Stock | Health |
| Issuer | Vanguard | Vanguard |
| AUM | 25.7B | 17.94B |
| Avg. Return | 6.68% | 16.04% |
| Div. Yield | 2.52% | 1.15% |
| Expense Ratio | 0.08% | 0.1% |
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%.
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%.
VGK’s dividend yield is 1.37% higher than that of VHT (2.52% vs. 1.15%). Also, VGK yielded on average 9.36% less per year over the past decade (6.68% vs. 16.04%). The expense ratio of VGK is 0.02 percentage points lower than VHT’s (0.08% vs. 0.1%).
Fund Composition
Industry Exposure
| VGK | VHT | |
| Technology | 8.3% | 0.05% |
| Industrials | 15.58% | 0.05% |
| Energy | 4.3% | 0.0% |
| Communication Services | 5.09% | 0.0% |
| Utilities | 3.89% | 0.0% |
| Healthcare | 13.76% | 99.57% |
| Consumer Defensive | 11.39% | 0.0% |
| Real Estate | 2.57% | 0.0% |
| Financial Services | 15.85% | 0.02% |
| Consumer Cyclical | 11.6% | 0.0% |
| Basic Materials | 7.67% | 0.31% |
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%.
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%.
VGK is 15.83% more exposed to the Financial Services sector than VHT (15.85% vs 0.02%). VGK’s exposure to Industrials and Healthcare stocks is 15.53% higher and 85.81% lower respectively (15.58% vs. 0.05% and 13.76% vs. 99.57%). In total, Utilities, Energy, and Communication Services also make up 13.28% more of the fund’s holdings compared to VHT (13.28% vs. 0.00%).
Holdings
| 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%.
| 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
| VGK | VHT | |
| Mean Return | 0.61 | 1.33 |
| R-squared | 92.76 | 59.86 |
| Std. Deviation | 16.65 | 13.58 |
| Alpha | 0.45 | 7.99 |
| Beta | 1.06 | 0.75 |
| Sharpe Ratio | 0.4 | 1.13 |
| Treynor Ratio | 5.12 | 20.74 |
The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Standard Deviation of 16.65 with a Sharpe Ratio of 0.4 and a Mean Return of 0.61. Its Alpha is 0.45 while VGK’s Beta is 1.06. Furthermore, the fund has a R-squared of 92.76 and a Treynor Ratio of 5.12.
The Vanguard Health Care Index Fund ETF Shares (VHT) has a Beta of 0.75 with a Treynor Ratio of 20.74 and a Mean Return of 1.33. Its Standard Deviation is 13.58 while VHT’s R-squared is 59.86. Furthermore, the fund has a Alpha of 7.99 and a Sharpe Ratio of 1.13.
VGK’s Mean Return is 0.72 points lower than that of VHT and its R-squared is 32.90 points higher. With a Standard Deviation of 16.65, VGK is slightly more volatile than VHT. The Alpha and Beta of VGK are 7.54 points lower and 0.31 points higher than VHT’s Alpha and Beta.
Performance
Annual Returns
| Year | VGK | VHT |
| 2020 | 6.5% | 18.21% |
| 2019 | 24.26% | 21.97% |
| 2018 | -14.79% | 5.55% |
| 2017 | 27.06% | 23.34% |
| 2016 | -0.59% | -3.33% |
| 2015 | -1.87% | 7.22% |
| 2014 | -6.56% | 25.38% |
| 2013 | 24.93% | 42.67% |
| 2012 | 21.01% | 19.1% |
| 2011 | -11.49% | 10.57% |
| 2010 | 5.01% | 5.75% |
VGK had its best year in 2017 with an annual return of 27.06%. VGK’s worst year over the past decade yielded -14.79% and occurred in 2018. In most years the Vanguard FTSE Europe Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to -0.59%, 5.01%, and 6.5% 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 |
| VGK | $10,000 | $18,350 | 6.68% |
| VHT | $10,000 | $48,464 | 16.04% |
A $10,000 investment in VGK would have resulted in a final balance of $18,350. This is a profit of $8,350 over 11 years and amounts to a compound annual growth rate (CAGR) of 6.68%.
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%.
VGK’s CAGR is 9.36 percentage points lower than that of VHT and as a result, would have yielded $30,114 less on a $10,000 investment. Thus, VGK performed worse than VHT by 9.36% annually.
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