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VGT vs. BIV: What’s The Difference?

The Vanguard Information Technology Index Fund ETF Shares (VGT) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between VGT and BIV? And which fund is better?

The expense ratio of VGT is 0.05 percentage points higher than BIV’s (0.1% vs. 0.05%). VGT also has a high exposure to the technology sector while BIV is mostly comprised of AAA bonds. Overall, VGT has provided higher returns than BIV over the past ten years.

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

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Summary

VGTBIV
NameVanguard Information Technology Index Fund ETF SharesVanguard Intermediate-Term Bond Index Fund ETF Shares
CategoryTechnologyIntermediate-Term Bond
IssuerVanguardVanguard
AUM54.13B39.05B
Avg. Return20.84%5.31%
Div. Yield0.66%2.06%
Expense Ratio0.1%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%.

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.

VGT’s dividend yield is 1.40% lower than that of BIV (0.66% vs. 2.06%). Also, VGT yielded on average 15.52% more per year over the past decade (20.84% vs. 5.31%). The expense ratio of VGT is 0.05 percentage points higher than BIV’s (0.1% vs. 0.05%).

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Fund Composition

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%.

BIV - Holdings

BIV Bond SectorsWeight
AAA54.51%
BBB25.24%
A16.97%
AA3.1%
Others0.15%
Below B0.03%
B0.0%
BB0.0%
US Government0.0%

BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.

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Risk Analysis

VGTBIV
Mean Return1.760.35
R-squared74.8495.12
Std. Deviation16.614.09
Alpha10.41-0.07
Beta1.021.33
Sharpe Ratio1.230.89
Treynor Ratio20.552.72

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

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Beta of 1.33 with a Alpha of -0.07 and a Treynor Ratio of 2.72. Its Mean Return is 0.35 while BIV’s Standard Deviation is 4.09. Furthermore, the fund has a Sharpe Ratio of 0.89 and a R-squared of 95.12.

VGT’s Mean Return is 1.41 points higher than that of BIV and its R-squared is 20.28 points lower. With a Standard Deviation of 16.61, VGT is slightly more volatile than BIV. The Alpha and Beta of VGT are 10.48 points higher and 0.31 points lower than BIV’s Alpha and Beta.

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Performance

Annual Returns

VGT vs. BIV - Annual Returns

YearVGTBIV
202045.94%9.71%
201948.68%10.19%
20182.52%-0.09%
201737.07%3.8%
201613.73%2.86%
20155.02%1.23%
201418.01%7.0%
201330.91%-3.44%
201214.05%7.02%
20110.52%10.62%
201012.74%9.55%

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 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.

Portfolio Growth

VGT vs. BIV - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VGT$10,000$72,71820.84%
BIV$10,000$17,4925.31%

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 BIV, the end total would have been $17,492. This equates to a $7,492 profit over 11 years and a compound annual growth rate (CAGR) of 5.31%.

VGT’s CAGR is 15.52 percentage points higher than that of BIV and as a result, would have yielded $55,226 more on a $10,000 investment. Thus, VGT outperformed BIV by 15.52% annually.


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