The Vanguard Information Technology Index Fund ETF Shares (VGT) and the iShares Russell Mid-Cap ETF (IWR) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and IWR is a iShares Mid-Cap Blend fund. So, what’s the difference between VGT and IWR? And which fund is better?
The expense ratio of VGT is 0.09 percentage points lower than IWR’s (0.1% vs. 0.19%). VGT also has a higher exposure to the technology sector and a higher standard deviation. Overall, VGT has provided higher returns than IWR over the past ten years.
In this article, we’ll compare VGT vs. IWR. We’ll look at portfolio growth and annual returns, as well as at their performance and holdings. Moreover, I’ll also discuss VGT’s and IWR’s risk metrics, fund composition, and industry exposure and examine how these affect their overall returns.
Summary
| VGT | IWR | |
| Name | Vanguard Information Technology Index Fund ETF Shares | iShares Russell Mid-Cap ETF |
| Category | Technology | Mid-Cap Blend |
| Issuer | Vanguard | iShares |
| AUM | 54.13B | 29.84B |
| Avg. Return | 20.84% | 14.15% |
| Div. Yield | 0.66% | 0.99% |
| Expense Ratio | 0.1% | 0.19% |
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 Mid-Cap ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% with an expense ratio of 0.19%.
VGT’s dividend yield is 0.33% lower than that of IWR (0.66% vs. 0.99%). Also, VGT yielded on average 6.68% more per year over the past decade (20.84% vs. 14.15%). The expense ratio of VGT is 0.09 percentage points lower than IWR’s (0.1% vs. 0.19%).
Fund Composition
Industry Exposure
| VGT | IWR | |
| Technology | 88.89% | 19.67% |
| Industrials | 1.67% | 14.54% |
| Energy | 0.0% | 3.48% |
| Communication Services | 0.61% | 4.64% |
| Utilities | 0.0% | 4.46% |
| Healthcare | 0.0% | 11.76% |
| Consumer Defensive | 0.0% | 3.82% |
| Real Estate | 0.0% | 8.31% |
| Financial Services | 8.83% | 11.64% |
| Consumer Cyclical | 0.0% | 13.59% |
| Basic Materials | 0.0% | 4.1% |
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 Mid-Cap ETF (IWR) has the most exposure to the Technology sector at 19.67%. This is followed by Industrials and Consumer Cyclical at 14.54% and 13.59% respectively. Consumer Defensive (3.82%), Basic Materials (4.1%), and Utilities (4.46%) only make up 12.38% of the fund’s total assets.
IWR’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Healthcare, and Consumer Cyclical stocks at 4.64%, 8.31%, 11.64%, 11.76%, and 13.59%.
VGT is 69.22% more exposed to the Technology sector than IWR (88.89% vs 19.67%). VGT’s exposure to Financial Services and Industrials stocks is 2.81% lower and 12.87% lower respectively (8.83% vs. 11.64% and 1.67% vs. 14.54%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 25.72% less of the fund’s holdings compared to IWR (0.00% vs. 25.72%).
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%.
| IWR Holdings | Weight |
| IDEXX Laboratories Inc | 0.51% |
| DocuSign Inc | 0.51% |
| Twitter Inc | 0.48% |
| Chipotle Mexican Grill Inc | 0.47% |
| Roku Inc Class A | 0.44% |
| Marvell Technology Inc | 0.44% |
| DexCom Inc | 0.44% |
| Trane Technologies PLC | 0.43% |
| MSCI Inc | 0.43% |
| Carrier Global Corp Ordinary Shares | 0.43% |
IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.
Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.
Risk Analysis
| VGT | IWR | |
| Mean Return | 1.76 | 1.17 |
| R-squared | 74.84 | 91.52 |
| Std. Deviation | 16.61 | 15.66 |
| Alpha | 10.41 | -2.8 |
| Beta | 1.02 | 1.11 |
| Sharpe Ratio | 1.23 | 0.86 |
| Treynor Ratio | 20.55 | 11.72 |
The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Treynor Ratio of 20.55 with a R-squared of 74.84 and a Beta of 1.02. Its Sharpe Ratio is 1.23 while VGT’s Alpha is 10.41. Furthermore, the fund has a Standard Deviation of 16.61 and a Mean Return of 1.76.
The iShares Russell Mid-Cap ETF (IWR) has a Beta of 1.11 with a Mean Return of 1.17 and a Treynor Ratio of 11.72. Its Standard Deviation is 15.66 while IWR’s Alpha is -2.8. Furthermore, the fund has a R-squared of 91.52 and a Sharpe Ratio of 0.86.
VGT’s Mean Return is 0.59 points higher than that of IWR and its R-squared is 16.68 points lower. With a Standard Deviation of 16.61, VGT is slightly more volatile than IWR. The Alpha and Beta of VGT are 13.21 points higher and 0.09 points lower than IWR’s Alpha and Beta.
Performance
Annual Returns
| Year | VGT | IWR |
| 2020 | 45.94% | 16.91% |
| 2019 | 48.68% | 30.31% |
| 2018 | 2.52% | -9.13% |
| 2017 | 37.07% | 18.32% |
| 2016 | 13.73% | 13.58% |
| 2015 | 5.02% | -2.57% |
| 2014 | 18.01% | 13.03% |
| 2013 | 30.91% | 34.5% |
| 2012 | 14.05% | 17.13% |
| 2011 | 0.52% | -1.67% |
| 2010 | 12.74% | 25.25% |
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 IWR, returning 34.5% on an annual basis. The poorest year for IWR in the last ten years was 2018, with a yield of -9.13%. Most years the iShares Russell Mid-Cap ETF has given investors modest returns, such as in 2016, 2020, and 2012, when gains were 13.58%, 16.91%, and 17.13% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VGT | $10,000 | $72,718 | 20.84% |
| IWR | $10,000 | $39,751 | 14.15% |
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 IWR, the end total would have been $39,751. This equates to a $29,751 profit over 11 years and a compound annual growth rate (CAGR) of 14.15%.
VGT’s CAGR is 6.68 percentage points higher than that of IWR and as a result, would have yielded $32,967 more on a $10,000 investment. Thus, VGT outperformed IWR by 6.68% annually.
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