The Vanguard FTSE Europe Index Fund ETF Shares (VGK) and the Vanguard Extended Market Index Fund ETF Shares (VXF) are both among the Top 100 ETFs. VGK is a Vanguard Europe Stock fund and VXF is a Vanguard Mid-Cap Growth fund. So, what’s the difference between VGK and VXF? And which fund is better?
The expense ratio of VGK is 0.02 percentage points higher than VXF’s (0.08% vs. 0.06%). VGK also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VGK has provided lower returns than VXF over the past 11 years.
In this article, we’ll compare VGK vs. VXF. We’ll look at performance and annual returns, as well as at their portfolio growth and holdings. Moreover, I’ll also discuss VGK’s and VXF’s risk metrics, fund composition, and industry exposure and examine how these affect their overall returns.
Summary
| VGK | VXF | |
| Name | Vanguard FTSE Europe Index Fund ETF Shares | Vanguard Extended Market Index Fund ETF Shares |
| Category | Europe Stock | Mid-Cap Growth |
| Issuer | Vanguard | Vanguard |
| AUM | 25.7B | 114.53B |
| Avg. Return | 6.68% | 15.47% |
| Div. Yield | 2.52% | 1.19% |
| Expense Ratio | 0.08% | 0.06% |
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 Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.
VGK’s dividend yield is 1.33% higher than that of VXF (2.52% vs. 1.19%). Also, VGK yielded on average 8.79% less per year over the past decade (6.68% vs. 15.47%). The expense ratio of VGK is 0.02 percentage points higher than VXF’s (0.08% vs. 0.06%).
Fund Composition
Industry Exposure
| VGK | VXF | |
| Technology | 8.3% | 23.61% |
| Industrials | 15.58% | 11.31% |
| Energy | 4.3% | 2.46% |
| Communication Services | 5.09% | 7.29% |
| Utilities | 3.89% | 1.65% |
| Healthcare | 13.76% | 15.25% |
| Consumer Defensive | 11.39% | 3.09% |
| Real Estate | 2.57% | 8.16% |
| Financial Services | 15.85% | 12.56% |
| Consumer Cyclical | 11.6% | 11.35% |
| Basic Materials | 7.67% | 3.26% |
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 Extended Market Index Fund ETF Shares (VXF) has the most exposure to the Technology sector at 23.61%. This is followed by Healthcare and Financial Services at 15.25% and 12.56% respectively. Energy (2.46%), Consumer Defensive (3.09%), and Basic Materials (3.26%) only make up 8.81% of the fund’s total assets.
VXF’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Industrials, Consumer Cyclical, and Financial Services stocks at 7.29%, 8.16%, 11.31%, 11.35%, and 12.56%.
VGK is 3.29% more exposed to the Financial Services sector than VXF (15.85% vs 12.56%). VGK’s exposure to Industrials and Healthcare stocks is 4.27% higher and 1.49% lower respectively (15.58% vs. 11.31% and 13.76% vs. 15.25%). In total, Utilities, Energy, and Communication Services also make up 1.88% more of the fund’s holdings compared to VXF (13.28% vs. 11.40%).
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%.
| VXF Holdings | Weight |
| Square Inc A | 1.2% |
| Zoom Video Communications Inc | 1.04% |
| Uber Technologies Inc | 0.93% |
| Moderna Inc | 0.9% |
| Blackstone Group Inc | 0.83% |
| Snap Inc Class A | 0.8% |
| Twilio Inc A | 0.73% |
| DocuSign Inc | 0.68% |
| CrowdStrike Holdings Inc Class A | 0.63% |
| Marvell Technology Inc | 0.6% |
VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.
Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.
Risk Analysis
| VGK | VXF | |
| Mean Return | 0.61 | 1.24 |
| R-squared | 92.76 | 85.73 |
| Std. Deviation | 16.65 | 18.04 |
| Alpha | 0.45 | -3.26 |
| Beta | 1.06 | 1.23 |
| Sharpe Ratio | 0.4 | 0.79 |
| Treynor Ratio | 5.12 | 10.92 |
The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Standard Deviation of 16.65 with a Mean Return of 0.61 and a R-squared of 92.76. Its Alpha is 0.45 while VGK’s Sharpe Ratio is 0.4. Furthermore, the fund has a Treynor Ratio of 5.12 and a Beta of 1.06.
The Vanguard Extended Market Index Fund ETF Shares (VXF) has a Treynor Ratio of 10.92 with a Beta of 1.23 and a Sharpe Ratio of 0.79. Its Mean Return is 1.24 while VXF’s Standard Deviation is 18.04. Furthermore, the fund has a R-squared of 85.73 and a Alpha of -3.26.
VGK’s Mean Return is 0.63 points lower than that of VXF and its R-squared is 7.03 points higher. With a Standard Deviation of 16.65, VGK is slightly less volatile than VXF. The Alpha and Beta of VGK are 3.71 points higher and 0.17 points lower than VXF’s Alpha and Beta.
Performance
Annual Returns
| Year | VGK | VXF |
| 2020 | 6.5% | 32.19% |
| 2019 | 24.26% | 28.04% |
| 2018 | -14.79% | -9.37% |
| 2017 | 27.06% | 18.1% |
| 2016 | -0.59% | 16.16% |
| 2015 | -1.87% | -3.26% |
| 2014 | -6.56% | 7.55% |
| 2013 | 24.93% | 38.37% |
| 2012 | 21.01% | 18.48% |
| 2011 | -11.49% | -3.61% |
| 2010 | 5.01% | 27.55% |
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 VXF, returning 38.37% on an annual basis. The poorest year for VXF in the last ten years was 2018, with a yield of -9.37%. Most years the Vanguard Extended Market Index Fund ETF Shares has given investors modest returns, such as in 2016, 2017, and 2012, when gains were 16.16%, 18.1%, and 18.48% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VGK | $10,000 | $18,350 | 6.68% |
| VXF | $10,000 | $44,130 | 15.47% |
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 VXF, the end total would have been $44,130. This equates to a $34,130 profit over 11 years and a compound annual growth rate (CAGR) of 15.47%.
VGK’s CAGR is 8.79 percentage points lower than that of VXF and as a result, would have yielded $25,780 less on a $10,000 investment. Thus, VGK performed worse than VXF by 8.79% annually.
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