The Vanguard Information Technology Index Fund ETF Shares (VGT) and the iShares Russell 1000 ETF (IWB) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and IWB is a iShares Large Blend fund. So, what’s the difference between VGT and IWB? And which fund is better?
The expense ratio of VGT is 0.05 percentage points lower than IWB’s (0.1% vs. 0.15%). VGT also has a higher exposure to the technology sector and a higher standard deviation. Overall, VGT has provided higher returns than IWB over the past ten years.
In this article, we’ll compare VGT vs. IWB. We’ll look at performance and fund composition, as well as at their holdings and industry exposure. Moreover, I’ll also discuss VGT’s and IWB’s risk metrics, portfolio growth, and annual returns and examine how these affect their overall returns.
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Summary
| VGT | IWB | |
| Name | Vanguard Information Technology Index Fund ETF Shares | iShares Russell 1000 ETF |
| Category | Technology | Large Blend |
| Issuer | Vanguard | iShares |
| AUM | 54.13B | 30.54B |
| Avg. Return | 20.84% | 14.64% |
| Div. Yield | 0.66% | 1.14% |
| Expense Ratio | 0.1% | 0.15% |
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 Russell 1000 ETF (IWB) is a Large Blend fund that is issued by iShares. It currently has 30.54B total assets under management and has yielded an average annual return of 14.64% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.15%.
VGT’s dividend yield is 0.48% lower than that of IWB (0.66% vs. 1.14%). Also, VGT yielded on average 6.20% more per year over the past decade (20.84% vs. 14.64%). The expense ratio of VGT is 0.05 percentage points lower than IWB’s (0.1% vs. 0.15%).
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Fund Composition
Industry Exposure
| VGT | IWB | |
| Technology | 88.89% | 25.33% |
| Industrials | 1.67% | 8.88% |
| Energy | 0.0% | 2.44% |
| Communication Services | 0.61% | 10.83% |
| Utilities | 0.0% | 2.36% |
| Healthcare | 0.0% | 13.35% |
| Consumer Defensive | 0.0% | 5.97% |
| Real Estate | 0.0% | 3.34% |
| Financial Services | 8.83% | 13.64% |
| Consumer Cyclical | 0.0% | 11.85% |
| Basic Materials | 0.0% | 2.02% |
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 Russell 1000 ETF (IWB) has the most exposure to the Technology sector at 25.33%. This is followed by Financial Services and Healthcare at 13.64% and 13.35% respectively. Utilities (2.36%), Energy (2.44%), and Real Estate (3.34%) only make up 8.14% of the fund’s total assets.
IWB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.88%, 10.83%, 11.85%, and 13.35%.
VGT is 63.56% more exposed to the Technology sector than IWB (88.89% vs 25.33%). VGT’s exposure to Financial Services and Industrials stocks is 4.81% lower and 7.21% lower respectively (8.83% vs. 13.64% and 1.67% vs. 8.88%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 21.16% less of the fund’s holdings compared to IWB (0.00% vs. 21.16%).
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%.
| IWB Holdings | Weight |
| Apple Inc | 5.45% |
| Microsoft Corp | 5.11% |
| Amazon.com Inc | 3.43% |
| Facebook Inc Class A | 2.03% |
| Alphabet Inc Class A | 1.93% |
| Alphabet Inc Class C | 1.82% |
| Tesla Inc | 1.27% |
| Berkshire Hathaway Inc Class B | 1.24% |
| NVIDIA Corp | 1.11% |
| JPMorgan Chase & Co | 1.09% |
IWB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.45%, 5.11%, 3.43%, 2.03%, and 1.93%.
Alphabet Inc Class C (1.82%), Tesla Inc (1.27%), and Berkshire Hathaway Inc Class B (1.24%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the IWB’s holdings at 1.11% and 1.09%.
Risk Analysis
| VGT | IWB | |
| Mean Return | 1.76 | 1.27 |
| R-squared | 74.84 | 99.73 |
| Std. Deviation | 16.61 | 13.87 |
| Alpha | 10.41 | -0.38 |
| Beta | 1.02 | 1.02 |
| Sharpe Ratio | 1.23 | 1.05 |
| Treynor Ratio | 20.55 | 14.31 |
The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Beta of 1.02 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 R-squared of 74.84.
The iShares Russell 1000 ETF (IWB) has a Alpha of -0.38 with a Mean Return of 1.27 and a Beta of 1.02. Its Standard Deviation is 13.87 while IWB’s Sharpe Ratio is 1.05. Furthermore, the fund has a R-squared of 99.73 and a Treynor Ratio of 14.31.
VGT’s Mean Return is 0.49 points higher than that of IWB and its R-squared is 24.89 points lower. With a Standard Deviation of 16.61, VGT is slightly more volatile than IWB. The Alpha and Beta of VGT are 10.79 points higher and 0.00 points lower than IWB’s Alpha and Beta.
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Performance
Annual Returns
| Year | VGT | IWB |
| 2020 | 45.94% | 20.8% |
| 2019 | 48.68% | 31.26% |
| 2018 | 2.52% | -4.91% |
| 2017 | 37.07% | 21.53% |
| 2016 | 13.73% | 11.91% |
| 2015 | 5.02% | 0.82% |
| 2014 | 18.01% | 13.08% |
| 2013 | 30.91% | 32.93% |
| 2012 | 14.05% | 16.27% |
| 2011 | 0.52% | 1.36% |
| 2010 | 12.74% | 15.94% |
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 IWB, returning 32.93% on an annual basis. The poorest year for IWB in the last ten years was 2018, with a yield of -4.91%. Most years the iShares Russell 1000 ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.08%, 15.94%, and 16.27% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VGT | $10,000 | $72,718 | 20.84% |
| IWB | $10,000 | $42,462 | 14.64% |
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 IWB, the end total would have been $42,462. This equates to a $32,462 profit over 11 years and a compound annual growth rate (CAGR) of 14.64%.
VGT’s CAGR is 6.20 percentage points higher than that of IWB and as a result, would have yielded $30,256 more on a $10,000 investment. Thus, VGT outperformed IWB by 6.20% annually.
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