The Vanguard Information Technology Index Fund ETF Shares (VGT) and the iShares Core S&P Total U.S. Stock Market ETF (ITOT) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and ITOT is a iShares Large Blend fund. So, what’s the difference between VGT and ITOT? And which fund is better?
The expense ratio of VGT is 0.07 percentage points higher than ITOT’s (0.1% vs. 0.03%). VGT also has a higher exposure to the technology sector and a higher standard deviation. Overall, VGT has provided higher returns than ITOT over the past ten years.
In this article, we’ll compare VGT vs. ITOT. We’ll look at risk metrics and performance, as well as at their fund composition and holdings. Moreover, I’ll also discuss VGT’s and ITOT’s annual returns, portfolio growth, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Information Technology Index Fund ETF Shares||iShares Core S&P Total U.S. Stock Market 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 Core S&P Total U.S. Stock Market ETF (ITOT) is a Large Blend fund that is issued by iShares. It currently has 41.97B total assets under management and has yielded an average annual return of 14.59% over the past 10 years. The fund has a dividend yield of 1.2% with an expense ratio of 0.03%.
VGT’s dividend yield is 0.54% lower than that of ITOT (0.66% vs. 1.2%). Also, VGT yielded on average 6.25% more per year over the past decade (20.84% vs. 14.59%). The expense ratio of VGT is 0.07 percentage points higher than ITOT’s (0.1% vs. 0.03%).
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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 S&P Total U.S. Stock Market ETF (ITOT) has the most exposure to the Technology sector at 24.49%. This is followed by Financial Services and Healthcare at 13.69% and 13.59% respectively. Basic Materials (2.47%), Energy (2.51%), and Real Estate (3.67%) only make up 8.65% of the fund’s total assets.
ITOT’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.79%, 9.21%, 10.54%, 11.69%, and 13.59%.
VGT is 64.40% more exposed to the Technology sector than ITOT (88.89% vs 24.49%). VGT’s exposure to Financial Services and Industrials stocks is 4.86% lower and 7.54% lower respectively (8.83% vs. 13.69% and 1.67% vs. 9.21%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 21.15% less of the fund’s holdings compared to ITOT (0.00% vs. 21.15%).
|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%.
|Facebook Inc Class A||1.89%|
|Alphabet Inc Class A||1.79%|
|Alphabet Inc Class C||1.71%|
|Berkshire Hathaway Inc Class B||1.17%|
|JPMorgan Chase & Co||1.02%|
ITOT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.07%, 4.75%, 3.16%, 1.89%, and 1.79%.
Alphabet Inc Class C (1.71%), Tesla Inc (1.17%), and Berkshire Hathaway Inc Class B (1.17%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ITOT’s holdings at 1.08% and 1.02%.
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The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Treynor Ratio of 20.55 with a Beta of 1.02 and a Alpha of 10.41. Its Mean Return is 1.76 while VGT’s Sharpe Ratio is 1.23. Furthermore, the fund has a Standard Deviation of 16.61 and a R-squared of 74.84.
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a Treynor Ratio of 14.13 with a Sharpe Ratio of 1.04 and a Mean Return of 1.27. Its R-squared is 99.4 while ITOT’s Beta is 1.03. Furthermore, the fund has a Standard Deviation of 14.02 and a Alpha of -0.54.
VGT’s Mean Return is 0.49 points higher than that of ITOT and its R-squared is 24.56 points lower. With a Standard Deviation of 16.61, VGT is slightly more volatile than ITOT. The Alpha and Beta of VGT are 10.95 points higher and 0.01 points lower than ITOT’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 2013 was the strongest year for ITOT, returning 32.67% on an annual basis. The poorest year for ITOT in the last ten years was 2018, with a yield of -5.27%. Most years the iShares Core S&P Total U.S. Stock Market ETF has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 13.01%, 15.98%, and 16.15% 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 ITOT, the end total would have been $42,310. This equates to a $32,310 profit over 11 years and a compound annual growth rate (CAGR) of 14.59%.
VGT’s CAGR is 6.25 percentage points higher than that of ITOT and as a result, would have yielded $30,408 more on a $10,000 investment. Thus, VGT outperformed ITOT by 6.25% annually.
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