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VGT vs. DGRO: What’s The Difference?

The Vanguard Information Technology Index Fund ETF Shares (VGT) and the iShares Core Dividend Growth ETF (DGRO) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and DGRO is a iShares Large Value fund. So, what’s the difference between VGT and DGRO? And which fund is better?

The expense ratio of VGT is 0.02 percentage points higher than DGRO’s (0.1% vs. 0.08%). VGT also has a higher exposure to the technology sector and a higher standard deviation. Overall, VGT has provided higher returns than DGRO over the past ten years.

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

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Summary

VGTDGRO
NameVanguard Information Technology Index Fund ETF SharesiShares Core Dividend Growth ETF
CategoryTechnologyLarge Value
IssuerVanguardiShares
AUM54.13B20B
Avg. Return20.84%12.46%
Div. Yield0.66%2.04%
Expense Ratio0.1%0.08%

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 Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.

VGT’s dividend yield is 1.38% lower than that of DGRO (0.66% vs. 2.04%). Also, VGT yielded on average 8.38% more per year over the past decade (20.84% vs. 12.46%). The expense ratio of VGT is 0.02 percentage points higher than DGRO’s (0.1% vs. 0.08%).

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Fund Composition

Industry Exposure

VGT vs. DGRO - Industry Exposure

VGTDGRO
Technology88.89%18.98%
Industrials1.67%12.52%
Energy0.0%0.11%
Communication Services0.61%4.53%
Utilities0.0%7.34%
Healthcare0.0%17.55%
Consumer Defensive0.0%10.24%
Real Estate0.0%0.0%
Financial Services8.83%18.47%
Consumer Cyclical0.0%7.42%
Basic Materials0.0%2.83%

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 Core Dividend Growth ETF (DGRO) has the most exposure to the Technology sector at 18.98%. This is followed by Financial Services and Healthcare at 18.47% and 17.55% respectively. Energy (0.11%), Basic Materials (2.83%), and Communication Services (4.53%) only make up 7.47% of the fund’s total assets.

DGRO’s mid-section with moderate exposure is comprised of Utilities, Consumer Cyclical, Consumer Defensive, Industrials, and Healthcare stocks at 7.34%, 7.42%, 10.24%, 12.52%, and 17.55%.

VGT is 69.91% more exposed to the Technology sector than DGRO (88.89% vs 18.98%). VGT’s exposure to Financial Services and Industrials stocks is 9.64% lower and 10.85% lower respectively (8.83% vs. 18.47% and 1.67% vs. 12.52%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 17.66% less of the fund’s holdings compared to DGRO (0.00% vs. 17.66%).

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%.

DGRO - Holdings

DGRO HoldingsWeight
Microsoft Corp3.29%
Apple Inc3.26%
Pfizer Inc2.89%
Johnson & Johnson2.87%
Procter & Gamble Co2.79%
Verizon Communications Inc2.68%
JPMorgan Chase & Co2.57%
The Home Depot Inc2.35%
Merck & Co Inc2.11%
Cisco Systems Inc1.98%

DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.

Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.

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Risk Analysis

VGTDGRO
Mean Return1.760
R-squared74.840
Std. Deviation16.610
Alpha10.410
Beta1.020
Sharpe Ratio1.230
Treynor Ratio20.550

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

The iShares Core Dividend Growth ETF (DGRO) has a Treynor Ratio of 0 with a Mean Return of 0 and a Beta of 0. Its R-squared is 0 while DGRO’s Standard Deviation is 0. Furthermore, the fund has a Alpha of 0 and a Sharpe Ratio of 0.

VGT’s Mean Return is 1.76 points higher than that of DGRO and its R-squared is 74.84 points higher. With a Standard Deviation of 16.61, VGT is slightly more volatile than DGRO. The Alpha and Beta of VGT are 10.41 points higher and 1.02 points higher than DGRO’s Alpha and Beta.

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Performance

Annual Returns

VGT vs. DGRO - Annual Returns

YearVGTDGRO
202045.94%9.47%
201948.68%30.02%
20182.52%-2.24%
201737.07%22.84%
201613.73%15.27%
20155.02%-0.62%
201418.01%0.0%
201330.91%0.0%
201214.05%0.0%
20110.52%0.0%
201012.74%0.0%

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 DGRO, returning 30.02% on an annual basis. The poorest year for DGRO in the last ten years was 2018, with a yield of -2.24%. Most years the iShares Core Dividend Growth ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

VGT vs. DGRO - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VGT$10,000$36,41820.84%
DGRO$10,000$19,58012.46%

A $10,000 investment in VGT would have resulted in a final balance of $36,418. This is a profit of $26,418 over 6 years and amounts to a compound annual growth rate (CAGR) of 20.84%.

With a $10,000 investment in DGRO, the end total would have been $19,580. This equates to a $9,580 profit over 6 years and a compound annual growth rate (CAGR) of 12.46%.

VGT’s CAGR is 8.38 percentage points higher than that of DGRO and as a result, would have yielded $16,838 more on a $10,000 investment. Thus, VGT outperformed DGRO by 8.38% annually.


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