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VGT vs. MDY: What’s The Difference?

The Vanguard Information Technology Index Fund ETF Shares (VGT) and the SPDR S&P MIDCAP 400 ETF Trust (MDY) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and MDY is a SPDR State Street Global Advisors Mid-Cap Blend fund. So, what’s the difference between VGT and MDY? And which fund is better?

The expense ratio of VGT is 0.13 percentage points lower than MDY’s (0.1% vs. 0.23%). VGT also has a higher exposure to the technology sector and a lower standard deviation. Overall, VGT has provided higher returns than MDY over the past ten years.

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

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Summary

VGTMDY
NameVanguard Information Technology Index Fund ETF SharesSPDR S&P MIDCAP 400 ETF Trust
CategoryTechnologyMid-Cap Blend
IssuerVanguardSPDR State Street Global Advisors
AUM54.13B21.31B
Avg. Return20.84%13.29%
Div. Yield0.66%0.94%
Expense Ratio0.1%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 SPDR S&P MIDCAP 400 ETF Trust (MDY) is a Mid-Cap Blend fund that is issued by SPDR State Street Global Advisors. It currently has 21.31B total assets under management and has yielded an average annual return of 13.29% over the past 10 years. The fund has a dividend yield of 0.94% with an expense ratio of 0.23%.

VGT’s dividend yield is 0.28% lower than that of MDY (0.66% vs. 0.94%). Also, VGT yielded on average 7.55% more per year over the past decade (20.84% vs. 13.29%). The expense ratio of VGT is 0.13 percentage points lower than MDY’s (0.1% vs. 0.23%).

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Fund Composition

Industry Exposure

VGT vs. MDY - Industry Exposure

VGTMDY
Technology88.89%14.74%
Industrials1.67%17.88%
Energy0.0%2.52%
Communication Services0.61%1.63%
Utilities0.0%2.84%
Healthcare0.0%11.17%
Consumer Defensive0.0%4.2%
Real Estate0.0%9.66%
Financial Services8.83%15.2%
Consumer Cyclical0.0%14.89%
Basic Materials0.0%5.27%

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 SPDR S&P MIDCAP 400 ETF Trust (MDY) has the most exposure to the Industrials sector at 17.88%. This is followed by Financial Services and Consumer Cyclical at 15.2% and 14.89% respectively. Energy (2.52%), Utilities (2.84%), and Consumer Defensive (4.2%) only make up 9.56% of the fund’s total assets.

MDY’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Technology, and Consumer Cyclical stocks at 5.27%, 9.66%, 11.17%, 14.74%, and 14.89%.

VGT is 74.15% more exposed to the Technology sector than MDY (88.89% vs 14.74%). VGT’s exposure to Financial Services and Industrials stocks is 6.37% lower and 16.21% lower respectively (8.83% vs. 15.2% and 1.67% vs. 17.88%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 28.75% less of the fund’s holdings compared to MDY (0.00% vs. 28.75%).

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%.

MDY - Holdings

MDY HoldingsWeight
Bio-Techne Corp0.75%
Molina Healthcare Inc0.63%
Cognex Corp0.63%
Fair Isaac Corp0.62%
XPO Logistics Inc0.61%
SolarEdge Technologies Inc0.61%
Signature Bank0.6%
Graco Inc0.55%
Camden Property Trust0.55%
FactSet Research Systems Inc0.54%

MDY’s Top Holdings are Bio-Techne Corp, Molina Healthcare Inc, Cognex Corp, Fair Isaac Corp, and XPO Logistics Inc at 0.75%, 0.63%, 0.63%, 0.62%, and 0.61%.

SolarEdge Technologies Inc (0.61%), Signature Bank (0.6%), and Graco Inc (0.55%) have a slightly smaller but still significant weight. Camden Property Trust and FactSet Research Systems Inc are also represented in the MDY’s holdings at 0.55% and 0.54%.

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Risk Analysis

VGTMDY
Mean Return1.761.08
R-squared74.8486.66
Std. Deviation16.6116.83
Alpha10.41-4.1
Beta1.021.15
Sharpe Ratio1.230.73
Treynor Ratio20.559.97

The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Sharpe Ratio of 1.23 with a Standard Deviation of 16.61 and a Beta of 1.02. 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 Alpha of 10.41.

The SPDR S&P MIDCAP 400 ETF Trust (MDY) has a Alpha of -4.1 with a Sharpe Ratio of 0.73 and a Standard Deviation of 16.83. Its R-squared is 86.66 while MDY’s Treynor Ratio is 9.97. Furthermore, the fund has a Beta of 1.15 and a Mean Return of 1.08.

VGT’s Mean Return is 0.68 points higher than that of MDY and its R-squared is 11.82 points lower. With a Standard Deviation of 16.61, VGT is slightly less volatile than MDY. The Alpha and Beta of VGT are 14.51 points higher and 0.13 points lower than MDY’s Alpha and Beta.

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Performance

Annual Returns

VGT vs. MDY - Annual Returns

YearVGTMDY
202045.94%13.51%
201948.68%25.86%
20182.52%-11.28%
201737.07%15.89%
201613.73%20.33%
20155.02%-2.4%
201418.01%9.42%
201330.91%33.08%
201214.05%17.58%
20110.52%-1.99%
201012.74%26.17%

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 MDY, returning 33.08% on an annual basis. The poorest year for MDY in the last ten years was 2018, with a yield of -11.28%. Most years the SPDR S&P MIDCAP 400 ETF Trust has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 13.51%, 15.89%, and 17.58% respectively.

Portfolio Growth

VGT vs. MDY - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VGT$10,000$72,71820.84%
MDY$10,000$36,52413.29%

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 MDY, the end total would have been $36,524. This equates to a $26,524 profit over 11 years and a compound annual growth rate (CAGR) of 13.29%.

VGT’s CAGR is 7.55 percentage points higher than that of MDY and as a result, would have yielded $36,194 more on a $10,000 investment. Thus, VGT outperformed MDY by 7.55% annually.


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