The Vanguard Information Technology Index Fund ETF Shares (VGT) and the iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and IGSB is a iShares Short-Term Bond fund. So, what’s the difference between VGT and IGSB? And which fund is better?
The expense ratio of VGT is 0.04 percentage points higher than IGSB’s (0.1% vs. 0.06%). VGT also has a high exposure to the technology sector while IGSB is mostly comprised of BBB bonds. Overall, VGT has provided higher returns than IGSB over the past ten years.
In this article, we’ll compare VGT vs. IGSB. We’ll look at fund composition and risk metrics, as well as at their annual returns and holdings. Moreover, I’ll also discuss VGT’s and IGSB’s portfolio growth, industry exposure, and performance and examine how these affect their overall returns.
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|NameVanguard Information Technology Index Fund ETF SharesiShares 1-5 Year Investment Grade Corporate Bond ETF|
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 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.
VGT’s dividend yield is 1.36% lower than that of IGSB (0.66% vs. 2.02%). Also, VGT yielded on average 18.33% more per year over the past decade (20.84% vs. 2.51%). The expense ratio of VGT is 0.04 percentage points higher than IGSB’s (0.1% vs. 0.06%).
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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%.
|IGSB Bond Sectors||Weight|
IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.
The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Treynor Ratio of 20.55 with a Alpha of 10.41 and a Beta of 1.02. Its R-squared is 74.84 while VGT’s Sharpe Ratio is 1.23. Furthermore, the fund has a Mean Return of 1.76 and a Standard Deviation of 16.61.
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a R-squared of 26.13 with a Alpha of 0.69 and a Beta of 0.34. Its Sharpe Ratio is 0.82 while IGSB’s Treynor Ratio is 4.82. Furthermore, the fund has a Mean Return of 0.19 and a Standard Deviation of 2.
VGT’s Mean Return is 1.57 points higher than that of IGSB and its R-squared is 48.71 points higher. With a Standard Deviation of 16.61, VGT is slightly more volatile than IGSB. The Alpha and Beta of VGT are 9.72 points higher and 0.68 points higher than IGSB’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 IGSB, returning 7.01% on an annual basis. The poorest year for IGSB in the last ten years was 2015, with a yield of 0.7%. Most years the iShares 1-5 Year Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2011, 2017, and 2016, when gains were 1.34%, 1.41%, and 1.77% 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 IGSB, the end total would have been $13,103. This equates to a $3,103 profit over 11 years and a compound annual growth rate (CAGR) of 2.51%.
VGT’s CAGR is 18.33 percentage points higher than that of IGSB and as a result, would have yielded $59,615 more on a $10,000 investment. Thus, VGT outperformed IGSB by 18.33% annually.
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