VGT vs. MTUM: What’s The Difference?

The Vanguard Information Technology Index Fund ETF Shares (VGT) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and MTUM is a iShares Large Growth fund. So, what’s the difference between VGT and MTUM? And which fund is better?

The expense ratio of VGT is 0.05 percentage points lower than MTUM’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 MTUM over the past ten years.

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

Summary

VGT MTUM
Name Vanguard Information Technology Index Fund ETF Shares iShares MSCI USA Momentum Factor ETF
Category Technology Large Growth
Issuer Vanguard iShares
AUM 54.13B 14.53B
Avg. Return 20.84% 17.37%
Div. Yield 0.66% 0.44%
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 MSCI USA Momentum Factor ETF (MTUM) is a Large Growth fund that is issued by iShares. It currently has 14.53B total assets under management and has yielded an average annual return of 17.37% over the past 10 years. The fund has a dividend yield of 0.44% with an expense ratio of 0.15%.

VGT’s dividend yield is 0.22% higher than that of MTUM (0.66% vs. 0.44%). Also, VGT yielded on average 3.47% more per year over the past decade (20.84% vs. 17.37%). The expense ratio of VGT is 0.05 percentage points lower than MTUM’s (0.1% vs. 0.15%).

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Fund Composition

Industry Exposure

VGT vs. MTUM - Industry Exposure

VGT MTUM
Technology 88.89% 15.24%
Industrials 1.67% 12.47%
Energy 0.0% 1.77%
Communication Services 0.61% 13.18%
Utilities 0.0% 0.19%
Healthcare 0.0% 6.41%
Consumer Defensive 0.0% 2.88%
Real Estate 0.0% 0.43%
Financial Services 8.83% 34.32%
Consumer Cyclical 0.0% 9.96%
Basic Materials 0.0% 3.15%

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 MSCI USA Momentum Factor ETF (MTUM) has the most exposure to the Financial Services sector at 34.32%. This is followed by Technology and Communication Services at 15.24% and 13.18% respectively. Real Estate (0.43%), Energy (1.77%), and Consumer Defensive (2.88%) only make up 5.08% of the fund’s total assets.

MTUM’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Consumer Cyclical, Industrials, and Communication Services stocks at 3.15%, 6.41%, 9.96%, 12.47%, and 13.18%.

VGT is 73.65% more exposed to the Technology sector than MTUM (88.89% vs 15.24%). VGT’s exposure to Financial Services and Industrials stocks is 25.49% lower and 10.80% lower respectively (8.83% vs. 34.32% and 1.67% vs. 12.47%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 13.27% less of the fund’s holdings compared to MTUM (0.00% vs. 13.27%).

Holdings

VGT - 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%.

MTUM - Holdings

MTUM Holdings Weight
Tesla Inc 5.63%
The Walt Disney Co 4.39%
JPMorgan Chase & Co 4.35%
Berkshire Hathaway Inc Class B 4.34%
Bank of America Corp 3.81%
PayPal Holdings Inc 3.76%
Wells Fargo & Co 3.05%
Applied Materials Inc 3.05%
Moderna Inc 2.89%
Alphabet Inc Class C 2.84%

MTUM’s Top Holdings are Tesla Inc, The Walt Disney Co, JPMorgan Chase & Co, Berkshire Hathaway Inc Class B, and Bank of America Corp at 5.63%, 4.39%, 4.35%, 4.34%, and 3.81%.

PayPal Holdings Inc (3.76%), Wells Fargo & Co (3.05%), and Applied Materials Inc (3.05%) have a slightly smaller but still significant weight. Moderna Inc and Alphabet Inc Class C are also represented in the MTUM’s holdings at 2.89% and 2.84%.

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Risk Analysis

VGT MTUM
Mean Return 1.76 0
R-squared 74.84 0
Std. Deviation 16.61 0
Alpha 10.41 0
Beta 1.02 0
Sharpe Ratio 1.23 0
Treynor Ratio 20.55 0

The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Alpha of 10.41 with a R-squared of 74.84 and a Standard Deviation of 16.61. Its Beta is 1.02 while VGT’s Treynor Ratio is 20.55. Furthermore, the fund has a Sharpe Ratio of 1.23 and a Mean Return of 1.76.

The iShares MSCI USA Momentum Factor ETF (MTUM) has a Alpha of 0 with a Standard Deviation of 0 and a R-squared of 0. Its Treynor Ratio is 0 while MTUM’s Sharpe Ratio is 0. Furthermore, the fund has a Beta of 0 and a Mean Return of 0.

VGT’s Mean Return is 1.76 points higher than that of MTUM and its R-squared is 74.84 points higher. With a Standard Deviation of 16.61, VGT is slightly more volatile than MTUM. The Alpha and Beta of VGT are 10.41 points higher and 1.02 points higher than MTUM’s Alpha and Beta.

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Performance

Annual Returns

VGT vs. MTUM - Annual Returns

Year VGT MTUM
2020 45.94% 29.69%
2019 48.68% 27.57%
2018 2.52% -1.77%
2017 37.07% 37.6%
2016 13.73% 4.89%
2015 5.02% 9.12%
2014 18.01% 14.48%
2013 30.91% 0.0%
2012 14.05% 0.0%
2011 0.52% 0.0%
2010 12.74% 0.0%

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 2017 was the strongest year for MTUM, returning 37.6% on an annual basis. The poorest year for MTUM in the last ten years was 2018, with a yield of -1.77%. Most years the iShares MSCI USA Momentum Factor ETF has given investors modest returns, such as in 2010, 2016, and 2015, when gains were 0.0%, 4.89%, and 9.12% respectively.

Portfolio Growth

VGT vs. MTUM - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VGT $10,000 $42,977 20.84%
MTUM $10,000 $29,301 17.37%

A $10,000 investment in VGT would have resulted in a final balance of $42,977. This is a profit of $32,977 over 7 years and amounts to a compound annual growth rate (CAGR) of 20.84%.

With a $10,000 investment in MTUM, the end total would have been $29,301. This equates to a $19,301 profit over 7 years and a compound annual growth rate (CAGR) of 17.37%.

VGT’s CAGR is 3.47 percentage points higher than that of MTUM and as a result, would have yielded $13,676 more on a $10,000 investment. Thus, VGT outperformed MTUM by 3.47% annually.


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