The Vanguard Information Technology Index Fund ETF Shares (VGT) and the iShares S&P 500 Growth ETF (IVW) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and IVW is a iShares Large Growth fund. So, what’s the difference between VGT and IVW? And which fund is better?
The expense ratio of VGT is 0.08 percentage points lower than IVW’s (0.1% vs. 0.18%). VGT also has a higher exposure to the technology sector and a higher standard deviation. Overall, VGT has provided higher returns than IVW over the past ten years.
In this article, we’ll compare VGT vs. IVW. We’ll look at fund composition and portfolio growth, as well as at their holdings and performance. Moreover, I’ll also discuss VGT’s and IVW’s risk metrics, industry exposure, and annual returns and examine how these affect their overall returns.
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Summary
| VGT | IVW | |
| Name | Vanguard Information Technology Index Fund ETF Shares | iShares S&P 500 Growth ETF |
| Category | Technology | Large Growth |
| Issuer | Vanguard | iShares |
| AUM | 54.13B | 35.72B |
| Avg. Return | 20.84% | 16.74% |
| Div. Yield | 0.66% | 0.61% |
| Expense Ratio | 0.1% | 0.18% |
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 S&P 500 Growth ETF (IVW) is a Large Growth fund that is issued by iShares. It currently has 35.72B total assets under management and has yielded an average annual return of 16.74% over the past 10 years. The fund has a dividend yield of 0.61% with an expense ratio of 0.18%.
VGT’s dividend yield is 0.05% higher than that of IVW (0.66% vs. 0.61%). Also, VGT yielded on average 4.10% more per year over the past decade (20.84% vs. 16.74%). The expense ratio of VGT is 0.08 percentage points lower than IVW’s (0.1% vs. 0.18%).
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Fund Composition
Industry Exposure
| VGT | IVW | |
| Technology | 88.89% | 37.8% |
| Industrials | 1.67% | 5.72% |
| Energy | 0.0% | 0.06% |
| Communication Services | 0.61% | 15.44% |
| Utilities | 0.0% | 0.47% |
| Healthcare | 0.0% | 11.88% |
| Consumer Defensive | 0.0% | 3.84% |
| Real Estate | 0.0% | 1.11% |
| Financial Services | 8.83% | 6.78% |
| Consumer Cyclical | 0.0% | 15.25% |
| Basic Materials | 0.0% | 1.65% |
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 S&P 500 Growth ETF (IVW) has the most exposure to the Technology sector at 37.8%. This is followed by Communication Services and Consumer Cyclical at 15.44% and 15.25% respectively. Utilities (0.47%), Real Estate (1.11%), and Basic Materials (1.65%) only make up 3.23% of the fund’s total assets.
IVW’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 3.84%, 5.72%, 6.78%, 11.88%, and 15.25%.
VGT is 51.09% more exposed to the Technology sector than IVW (88.89% vs 37.8%). VGT’s exposure to Financial Services and Industrials stocks is 2.05% higher and 4.05% lower respectively (8.83% vs. 6.78% and 1.67% vs. 5.72%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 20.20% less of the fund’s holdings compared to IVW (0.00% vs. 20.20%).
Holdings
| VGT Holdings | Weight |
| Apple Inc | 19.58% |
| Microsoft Corp | 16.53% |
| NVIDIA Corp | 4.22% |
| Visa Inc Class A | 3.16% |
| PayPal Holdings Inc | 2.76% |
| Mastercard Inc Class A | 2.76% |
| Adobe Inc | 2.39% |
| Intel Corp | 1.94% |
| Salesforce.com Inc | 1.91% |
| 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%.
| IVW Holdings | Weight |
| Apple Inc | 11.46% |
| Microsoft Corp | 10.75% |
| Amazon.com Inc | 7.14% |
| Facebook Inc Class A | 4.28% |
| Alphabet Inc Class A | 4.06% |
| Alphabet Inc Class C | 3.86% |
| Tesla Inc | 2.65% |
| NVIDIA Corp | 2.43% |
| PayPal Holdings Inc | 1.62% |
| Adobe Inc | 1.49% |
IVW’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 11.46%, 10.75%, 7.14%, 4.28%, and 4.06%.
Alphabet Inc Class C (3.86%), Tesla Inc (2.65%), and NVIDIA Corp (2.43%) have a slightly smaller but still significant weight. PayPal Holdings Inc and Adobe Inc are also represented in the IVW’s holdings at 1.62% and 1.49%.
Risk Analysis
| VGT | IVW | |
| Mean Return | 1.76 | 1.44 |
| R-squared | 74.84 | 93.82 |
| Std. Deviation | 16.61 | 13.77 |
| Alpha | 10.41 | 2.19 |
| Beta | 1.02 | 0.98 |
| Sharpe Ratio | 1.23 | 1.21 |
| Treynor Ratio | 20.55 | 17.24 |
The Vanguard Information Technology Index Fund ETF Shares (VGT) has a R-squared of 74.84 with a Standard Deviation of 16.61 and a Alpha of 10.41. Its Treynor Ratio is 20.55 while VGT’s Sharpe Ratio is 1.23. Furthermore, the fund has a Mean Return of 1.76 and a Beta of 1.02.
The iShares S&P 500 Growth ETF (IVW) has a Beta of 0.98 with a R-squared of 93.82 and a Alpha of 2.19. Its Treynor Ratio is 17.24 while IVW’s Sharpe Ratio is 1.21. Furthermore, the fund has a Standard Deviation of 13.77 and a Mean Return of 1.44.
VGT’s Mean Return is 0.32 points higher than that of IVW and its R-squared is 18.98 points lower. With a Standard Deviation of 16.61, VGT is slightly more volatile than IVW. The Alpha and Beta of VGT are 8.22 points higher and 0.04 points higher than IVW’s Alpha and Beta.
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Performance
Annual Returns
| Year | VGT | IVW |
| 2020 | 45.94% | 33.21% |
| 2019 | 48.68% | 30.91% |
| 2018 | 2.52% | -0.17% |
| 2017 | 37.07% | 27.2% |
| 2016 | 13.73% | 6.74% |
| 2015 | 5.02% | 5.33% |
| 2014 | 18.01% | 14.67% |
| 2013 | 30.91% | 32.48% |
| 2012 | 14.05% | 14.39% |
| 2011 | 0.52% | 4.49% |
| 2010 | 12.74% | 14.84% |
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 2020 was the strongest year for IVW, returning 33.21% on an annual basis. The poorest year for IVW in the last ten years was 2018, with a yield of -0.17%. Most years the iShares S&P 500 Growth ETF has given investors modest returns, such as in 2012, 2014, and 2010, when gains were 14.39%, 14.67%, and 14.84% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VGT | $10,000 | $72,718 | 20.84% |
| IVW | $10,000 | $51,915 | 16.74% |
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 IVW, the end total would have been $51,915. This equates to a $41,915 profit over 11 years and a compound annual growth rate (CAGR) of 16.74%.
VGT’s CAGR is 4.10 percentage points higher than that of IVW and as a result, would have yielded $20,803 more on a $10,000 investment. Thus, VGT outperformed IVW by 4.10% annually.
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