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.

Summary

VGT ACWI
Name Vanguard Information Technology Index Fund ETF Shares iShares MSCI ACWI ETF
Category Technology N/A
Issuer Vanguard iShares
AUM 54.13B 16.85B
Avg. Return 20.84% 10.21%
Div. Yield 0.66% 1.39%
Expense Ratio 0.1% 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

VGT ACWI
Technology 88.89% 20.41%
Industrials 1.67% 9.65%
Energy 0.0% 3.48%
Communication Services 0.61% 9.87%
Utilities 0.0% 2.61%
Healthcare 0.0% 11.74%
Consumer Defensive 0.0% 7.15%
Real Estate 0.0% 2.75%
Financial Services 8.83% 15.58%
Consumer Cyclical 0.0% 12.01%
Basic Materials 0.0% 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 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%.

ACWI - Holdings

ACWI Holdings Weight
Apple Inc 3.44%
Microsoft Corp 2.91%
Amazon.com Inc 2.21%
Facebook Inc A 1.25%
Alphabet Inc Class C 1.12%
Alphabet Inc A 1.09%
Taiwan Semiconductor Manufacturing Co Ltd 0.79%
Tesla Inc 0.78%
NVIDIA Corp 0.74%
JPMorgan Chase & Co 0.71%

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

VGT ACWI
Mean Return 1.76 0.89
R-squared 74.84 99.96
Std. Deviation 16.61 14.05
Alpha 10.41 0.15
Beta 1.02 1
Sharpe Ratio 1.23 0.71
Treynor Ratio 20.55 9.45

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

Year VGT ACWI
2020 45.94% 16.38%
2019 48.68% 26.7%
2018 2.52% -9.15%
2017 37.07% 24.35%
2016 13.73% 8.22%
2015 5.02% -2.39%
2014 18.01% 4.64%
2013 30.91% 22.91%
2012 14.05% 15.99%
2011 0.52% -7.6%
2010 12.74% 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

Fund Initial Balance Final Balance CAGR
VGT $10,000 $72,718 20.84%
ACWI $10,000 $27,241 10.21%

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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