The Vanguard Information Technology Index Fund ETF Shares (VGT) and the Vanguard Short-Term Bond Index Fund ETF Shares (BSV) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and BSV is a Vanguard Short-Term Bond fund. So, what’s the difference between VGT and BSV? And which fund is better?
The expense ratio of VGT is 0.05 percentage points higher than BSV’s (0.1% vs. 0.05%). VGT also has a high exposure to the technology sector while BSV is mostly comprised of AAA bonds. Overall, VGT has provided higher returns than BSV over the past ten years.
In this article, we’ll compare VGT vs. BSV. We’ll look at portfolio growth and annual returns, as well as at their holdings and risk metrics. Moreover, I’ll also discuss VGT’s and BSV’s industry exposure, fund composition, and performance and examine how these affect their overall returns.
|Name||Vanguard Information Technology Index Fund ETF Shares||Vanguard Short-Term Bond Index Fund ETF Shares|
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 Short-Term Bond Index Fund ETF Shares (BSV) is a Short-Term Bond fund that is issued by Vanguard. It currently has 67.71B total assets under management and has yielded an average annual return of 2.27% over the past 10 years. The fund has a dividend yield of 1.48% with an expense ratio of 0.05%.
VGT’s dividend yield is 0.82% lower than that of BSV (0.66% vs. 1.48%). Also, VGT yielded on average 18.56% more per year over the past decade (20.84% vs. 2.27%). The expense ratio of VGT is 0.05 percentage points higher than BSV’s (0.1% vs. 0.05%).
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|Visa Inc Class A||3.16%|
|PayPal Holdings Inc||2.76%|
|Mastercard Inc Class A||2.76%|
|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%.
|BSV Bond Sectors||Weight|
BSV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 71.65%, 13.08%, 11.95%, 3.28%, and 0.03%. The fund is less weighted towards Below B (0.01%), B (0.0%), and BB (0.0%) rated bonds.
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The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Treynor Ratio of 20.55 with a Standard Deviation of 16.61 and a Beta of 1.02. Its Sharpe Ratio is 1.23 while VGT’s R-squared is 74.84. Furthermore, the fund has a Alpha of 10.41 and a Mean Return of 1.76.
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Sharpe Ratio of 0.98 with a R-squared of 78.38 and a Treynor Ratio of 3.33. Its Beta is 0.38 while BSV’s Alpha is 0.21. Furthermore, the fund has a Mean Return of 0.16 and a Standard Deviation of 1.33.
VGT’s Mean Return is 1.60 points higher than that of BSV and its R-squared is 3.54 points lower. With a Standard Deviation of 16.61, VGT is slightly more volatile than BSV. The Alpha and Beta of VGT are 10.20 points higher and 0.64 points higher than BSV’s Alpha and Beta.
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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 BSV, returning 4.92% on an annual basis. The poorest year for BSV in the last ten years was 2013, with a yield of 0.17%. Most years the Vanguard Short-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2018, 2016, and 2012, when gains were 1.34%, 1.42%, and 1.98% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 BSV, the end total would have been $12,785. This equates to a $2,785 profit over 11 years and a compound annual growth rate (CAGR) of 2.27%.
VGT’s CAGR is 18.56 percentage points higher than that of BSV and as a result, would have yielded $59,933 more on a $10,000 investment. Thus, VGT outperformed BSV by 18.56% annually.
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