The Vanguard Information Technology Index Fund ETF Shares (VGT) and the iShares Russell Mid-Cap Value ETF (IWS) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and IWS is a iShares Mid-Cap Value fund. So, what’s the difference between VGT and IWS? And which fund is better?
The expense ratio of VGT is 0.13 percentage points lower than IWS’s (0.1% vs. 0.23%). VGT also has a higher exposure to the technology sector and a higher standard deviation. Overall, VGT has provided higher returns than IWS over the past ten years.
In this article, we’ll compare VGT vs. IWS. We’ll look at performance and annual returns, as well as at their risk metrics and industry exposure. Moreover, I’ll also discuss VGT’s and IWS’s holdings, portfolio growth, and fund composition and examine how these affect their overall returns.
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Summary
| VGT | IWS | |
| Name | Vanguard Information Technology Index Fund ETF Shares | iShares Russell Mid-Cap Value ETF |
| Category | Technology | Mid-Cap Value |
| Issuer | Vanguard | iShares |
| AUM | 54.13B | 14.24B |
| Avg. Return | 20.84% | 12.35% |
| Div. Yield | 0.66% | 1.34% |
| Expense Ratio | 0.1% | 0.23% |
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 Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.
VGT’s dividend yield is 0.68% lower than that of IWS (0.66% vs. 1.34%). Also, VGT yielded on average 8.49% more per year over the past decade (20.84% vs. 12.35%). The expense ratio of VGT is 0.13 percentage points lower than IWS’s (0.1% vs. 0.23%).
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Fund Composition
Industry Exposure
| VGT | IWS | |
| Technology | 88.89% | 11.39% |
| Industrials | 1.67% | 14.6% |
| Energy | 0.0% | 4.71% |
| Communication Services | 0.61% | 4.08% |
| Utilities | 0.0% | 6.97% |
| Healthcare | 0.0% | 8.56% |
| Consumer Defensive | 0.0% | 4.76% |
| Real Estate | 0.0% | 11.71% |
| Financial Services | 8.83% | 15.75% |
| Consumer Cyclical | 0.0% | 12.07% |
| Basic Materials | 0.0% | 5.4% |
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 Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.
IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.
VGT is 77.50% more exposed to the Technology sector than IWS (88.89% vs 11.39%). VGT’s exposure to Financial Services and Industrials stocks is 6.92% lower and 12.93% lower respectively (8.83% vs. 15.75% and 1.67% vs. 14.6%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 28.54% less of the fund’s holdings compared to IWS (0.00% vs. 28.54%).
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%.
| IWS Holdings | Weight |
| Twitter Inc | 0.69% |
| Marvell Technology Inc | 0.69% |
| IHS Markit Ltd | 0.62% |
| Prudential Financial Inc | 0.56% |
| Otis Worldwide Corp Ordinary Shares | 0.54% |
| International Flavors & Fragrances Inc | 0.53% |
| Xcel Energy Inc | 0.52% |
| Motorola Solutions Inc | 0.52% |
| Aptiv PLC | 0.52% |
| Aflac Inc | 0.52% |
IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.
International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.
Risk Analysis
| VGT | IWS | |
| Mean Return | 1.76 | 1.06 |
| R-squared | 74.84 | 87.04 |
| Std. Deviation | 16.61 | 16.03 |
| Alpha | 10.41 | -4.11 |
| Beta | 1.02 | 1.1 |
| Sharpe Ratio | 1.23 | 0.75 |
| Treynor Ratio | 20.55 | 10.3 |
The Vanguard Information Technology Index Fund ETF Shares (VGT) has a R-squared of 74.84 with a Mean Return of 1.76 and a Beta of 1.02. Its Treynor Ratio is 20.55 while VGT’s Sharpe Ratio is 1.23. Furthermore, the fund has a Alpha of 10.41 and a Standard Deviation of 16.61.
The iShares Russell Mid-Cap Value ETF (IWS) has a Standard Deviation of 16.03 with a Mean Return of 1.06 and a R-squared of 87.04. Its Beta is 1.1 while IWS’s Alpha is -4.11. Furthermore, the fund has a Sharpe Ratio of 0.75 and a Treynor Ratio of 10.3.
VGT’s Mean Return is 0.70 points higher than that of IWS and its R-squared is 12.20 points lower. With a Standard Deviation of 16.61, VGT is slightly more volatile than IWS. The Alpha and Beta of VGT are 14.52 points higher and 0.08 points lower than IWS’s Alpha and Beta.
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Performance
Annual Returns
| Year | VGT | IWS |
| 2020 | 45.94% | 4.76% |
| 2019 | 48.68% | 26.78% |
| 2018 | 2.52% | -12.36% |
| 2017 | 37.07% | 13.1% |
| 2016 | 13.73% | 19.69% |
| 2015 | 5.02% | -4.93% |
| 2014 | 18.01% | 14.49% |
| 2013 | 30.91% | 33.11% |
| 2012 | 14.05% | 18.27% |
| 2011 | 0.52% | -1.55% |
| 2010 | 12.74% | 24.46% |
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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VGT | $10,000 | $72,718 | 20.84% |
| IWS | $10,000 | $33,083 | 12.35% |
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 IWS, the end total would have been $33,083. This equates to a $23,083 profit over 11 years and a compound annual growth rate (CAGR) of 12.35%.
VGT’s CAGR is 8.49 percentage points higher than that of IWS and as a result, would have yielded $39,635 more on a $10,000 investment. Thus, VGT outperformed IWS by 8.49% annually.
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