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VGT vs. IUSB: What’s The Difference?

The Vanguard Information Technology Index Fund ETF Shares (VGT) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and IUSB is a iShares N/A fund. So, what’s the difference between VGT and IUSB? And which fund is better?

The expense ratio of VGT is 0.04 percentage points higher than IUSB’s (0.1% vs. 0.06%). VGT also has a high exposure to the technology sector while IUSB is mostly comprised of AAA bonds. Overall, VGT has provided higher returns than IUSB over the past ten years.

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

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Summary

VGTIUSB
NameVanguard Information Technology Index Fund ETF SharesiShares Core Total USD Bond Market ETF
CategoryTechnologyN/A
IssuerVanguardiShares
AUM54.13B14.49B
Avg. Return20.84%4.13%
Div. Yield0.66%2.1%
Expense Ratio0.1%0.06%

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 Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.

VGT’s dividend yield is 1.44% lower than that of IUSB (0.66% vs. 2.1%). Also, VGT yielded on average 16.71% more per year over the past decade (20.84% vs. 4.13%). The expense ratio of VGT is 0.04 percentage points higher than IUSB’s (0.1% vs. 0.06%).

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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%.

IUSB - Holdings

IUSB Bond SectorsWeight
AAA58.32%
BBB16.98%
A12.27%
BB4.33%
AA3.36%
B2.8%
Others1.01%
Below B0.92%
US Government0.0%

IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.

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Risk Analysis

VGTIUSB
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 Beta of 1.02 with a Alpha of 10.41 and a Standard Deviation of 16.61. Its Mean Return is 1.76 while VGT’s R-squared is 74.84. Furthermore, the fund has a Treynor Ratio of 20.55 and a Sharpe Ratio of 1.23.

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

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

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Performance

Annual Returns

VGT vs. IUSB - Annual Returns

YearVGTIUSB
202045.94%7.59%
201948.68%9.26%
20182.52%-0.38%
201737.07%4.06%
201613.73%3.78%
20155.02%0.46%
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 IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.

Portfolio Growth

VGT vs. IUSB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VGT$10,000$36,41820.84%
IUSB$10,000$12,7044.13%

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 IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.

VGT’s CAGR is 16.71 percentage points higher than that of IUSB and as a result, would have yielded $23,714 more on a $10,000 investment. Thus, VGT outperformed IUSB by 16.71% annually.


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