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VGT vs. ACWI: What’s The Difference?

The Vanguard Information Technology Index Fund ETF Shares (VGT) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and ACWI is a iShares N/A fund. So, what’s the difference between VGT and ACWI? And which fund is better?

The expense ratio of VGT is 0.22 percentage points lower than ACWI’s (0.1% vs. 0.32%). VGT also has a higher exposure to the technology sector and a higher standard deviation. Overall, VGT has provided higher returns than ACWI over the past ten years.

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

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Summary

VGTACWI
NameVanguard Information Technology Index Fund ETF SharesiShares MSCI ACWI ETF
CategoryTechnologyN/A
IssuerVanguardiShares
AUM54.13B16.85B
Avg. Return20.84%10.21%
Div. Yield0.66%1.39%
Expense Ratio0.1%0.32%

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%.

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

VGT’s dividend yield is 0.73% lower than that of ACWI (0.66% vs. 1.39%). Also, VGT yielded on average 10.62% more per year over the past decade (20.84% vs. 10.21%). The expense ratio of VGT is 0.22 percentage points lower than ACWI’s (0.1% vs. 0.32%).

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Fund Composition

Industry Exposure

VGT vs. ACWI - Industry Exposure

VGTACWI
Technology88.89%20.41%
Industrials1.67%9.65%
Energy0.0%3.48%
Communication Services0.61%9.87%
Utilities0.0%2.61%
Healthcare0.0%11.74%
Consumer Defensive0.0%7.15%
Real Estate0.0%2.75%
Financial Services8.83%15.58%
Consumer Cyclical0.0%12.01%
Basic Materials0.0%4.73%

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%.

The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.

ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.

VGT is 68.48% more exposed to the Technology sector than ACWI (88.89% vs 20.41%). VGT’s exposure to Financial Services and Industrials stocks is 6.75% lower and 7.98% lower respectively (8.83% vs. 15.58% and 1.67% vs. 9.65%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 21.91% less of the fund’s holdings compared to ACWI (0.00% vs. 21.91%).

Holdings

VGT - Holdings

VGT HoldingsWeight
Apple Inc19.58%
Microsoft Corp16.53%
NVIDIA Corp4.22%
Visa Inc Class A3.16%
PayPal Holdings Inc2.76%
Mastercard Inc Class A2.76%
Adobe Inc2.39%
Intel Corp1.94%
Salesforce.com Inc1.91%
Cisco Systems Inc1.9%

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%.

ACWI - Holdings

ACWI HoldingsWeight
Apple Inc3.44%
Microsoft Corp2.91%
Amazon.com Inc2.21%
Facebook Inc A1.25%
Alphabet Inc Class C1.12%
Alphabet Inc A1.09%
Taiwan Semiconductor Manufacturing Co Ltd0.79%
Tesla Inc0.78%
NVIDIA Corp0.74%
JPMorgan Chase & Co0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

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Risk Analysis

VGTACWI
Mean Return1.760.89
R-squared74.8499.96
Std. Deviation16.6114.05
Alpha10.410.15
Beta1.021
Sharpe Ratio1.230.71
Treynor Ratio20.559.45

The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Beta of 1.02 with a Alpha of 10.41 and a Sharpe Ratio of 1.23. Its Treynor Ratio is 20.55 while VGT’s Standard Deviation is 16.61. Furthermore, the fund has a R-squared of 74.84 and a Mean Return of 1.76.

The iShares MSCI ACWI ETF (ACWI) has a Mean Return of 0.89 with a Beta of 1 and a Alpha of 0.15. Its Treynor Ratio is 9.45 while ACWI’s R-squared is 99.96. Furthermore, the fund has a Standard Deviation of 14.05 and a Sharpe Ratio of 0.71.

VGT’s Mean Return is 0.87 points higher than that of ACWI and its R-squared is 25.12 points lower. With a Standard Deviation of 16.61, VGT is slightly more volatile than ACWI. The Alpha and Beta of VGT are 10.26 points higher and 0.02 points higher than ACWI’s Alpha and Beta.

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Performance

Annual Returns

VGT vs. ACWI - Annual Returns

YearVGTACWI
202045.94%16.38%
201948.68%26.7%
20182.52%-9.15%
201737.07%24.35%
201613.73%8.22%
20155.02%-2.39%
201418.01%4.64%
201330.91%22.91%
201214.05%15.99%
20110.52%-7.6%
201012.74%12.31%

VGT had its best year in 2019 with an annual return of 48.68%. VGT’s worst year over the past decade yielded 0.52% and occurred in 2011. In most years the Vanguard Information Technology Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2014 where annual returns amounted to 13.73%, 14.05%, and 18.01% respectively.

The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.

Portfolio Growth

VGT vs. ACWI - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VGT$10,000$72,71820.84%
ACWI$10,000$27,24110.21%

A $10,000 investment in VGT would have resulted in a final balance of $72,718. This is a profit of $62,718 over 11 years and amounts to a compound annual growth rate (CAGR) of 20.84%.

With a $10,000 investment in ACWI, the end total would have been $27,241. This equates to a $17,241 profit over 11 years and a compound annual growth rate (CAGR) of 10.21%.

VGT’s CAGR is 10.62 percentage points higher than that of ACWI and as a result, would have yielded $45,477 more on a $10,000 investment. Thus, VGT outperformed ACWI by 10.62% annually.


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