VGT vs. SDY: What’s The Difference?

The Vanguard Information Technology Index Fund ETF Shares (VGT) and the SPDR S&P Dividend ETF (SDY) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and SDY is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between VGT and SDY? And which fund is better?

The expense ratio of VGT is 0.25 percentage points lower than SDY’s (0.1% vs. 0.35%). VGT also has a higher exposure to the technology sector and a higher standard deviation. Overall, VGT has provided higher returns than SDY over the past ten years.

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

Summary

VGT SDY
Name Vanguard Information Technology Index Fund ETF Shares SPDR S&P Dividend ETF
Category Technology Large Value
Issuer Vanguard SPDR State Street Global Advisors
AUM 54.13B 19.67B
Avg. Return 20.84% 12.44%
Div. Yield 0.66% 2.65%
Expense Ratio 0.1% 0.35%

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 Dividend ETF (SDY) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 19.67B total assets under management and has yielded an average annual return of 12.44% over the past 10 years. The fund has a dividend yield of 2.65% with an expense ratio of 0.35%.

VGT’s dividend yield is 1.99% lower than that of SDY (0.66% vs. 2.65%). Also, VGT yielded on average 8.40% more per year over the past decade (20.84% vs. 12.44%). The expense ratio of VGT is 0.25 percentage points lower than SDY’s (0.1% vs. 0.35%).

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Fund Composition

Industry Exposure

VGT vs. SDY - Industry Exposure

VGT SDY
Technology 88.89% 2.0%
Industrials 1.67% 15.89%
Energy 0.0% 5.95%
Communication Services 0.61% 4.64%
Utilities 0.0% 12.14%
Healthcare 0.0% 7.35%
Consumer Defensive 0.0% 14.01%
Real Estate 0.0% 6.57%
Financial Services 8.83% 16.32%
Consumer Cyclical 0.0% 8.68%
Basic Materials 0.0% 6.45%

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 Dividend ETF (SDY) has the most exposure to the Financial Services sector at 16.32%. This is followed by Industrials and Consumer Defensive at 15.89% and 14.01% respectively. Communication Services (4.64%), Energy (5.95%), and Basic Materials (6.45%) only make up 17.04% of the fund’s total assets.

SDY’s mid-section with moderate exposure is comprised of Real Estate, Healthcare, Consumer Cyclical, Utilities, and Consumer Defensive stocks at 6.57%, 7.35%, 8.68%, 12.14%, and 14.01%.

VGT is 86.89% more exposed to the Technology sector than SDY (88.89% vs 2.0%). VGT’s exposure to Financial Services and Industrials stocks is 7.49% lower and 14.22% lower respectively (8.83% vs. 16.32% and 1.67% vs. 15.89%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 29.26% less of the fund’s holdings compared to SDY (0.00% vs. 29.26%).

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%.

SDY - Holdings

SDY Holdings Weight
Exxon Mobil Corp 2.81%
AT&T Inc 2.5%
South Jersey Industries Inc 2.22%
Chevron Corp 2.02%
International Business Machines Corp 2.0%
AbbVie Inc 1.93%
National Retail Properties Inc 1.86%
Federal Realty Investment Trust 1.77%
Realty Income Corp 1.7%
Old Republic International Corp 1.65%

SDY’s Top Holdings are Exxon Mobil Corp, AT&T Inc, South Jersey Industries Inc, Chevron Corp, and International Business Machines Corp at 2.81%, 2.5%, 2.22%, 2.02%, and 2.0%.

AbbVie Inc (1.93%), National Retail Properties Inc (1.86%), and Federal Realty Investment Trust (1.77%) have a slightly smaller but still significant weight. Realty Income Corp and Old Republic International Corp are also represented in the SDY’s holdings at 1.7% and 1.65%.

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Risk Analysis

VGT SDY
Mean Return 1.76 1.07
R-squared 74.84 83.62
Std. Deviation 16.61 12.9
Alpha 10.41 -0.1
Beta 1.02 0.87
Sharpe Ratio 1.23 0.95
Treynor Ratio 20.55 13.94

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

The SPDR S&P Dividend ETF (SDY) has a Alpha of -0.1 with a Treynor Ratio of 13.94 and a Sharpe Ratio of 0.95. Its R-squared is 83.62 while SDY’s Mean Return is 1.07. Furthermore, the fund has a Beta of 0.87 and a Standard Deviation of 12.9.

VGT’s Mean Return is 0.69 points higher than that of SDY and its R-squared is 8.78 points lower. With a Standard Deviation of 16.61, VGT is slightly more volatile than SDY. The Alpha and Beta of VGT are 10.51 points higher and 0.15 points higher than SDY’s Alpha and Beta.

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Performance

Annual Returns

VGT vs. SDY - Annual Returns

Year VGT SDY
2020 45.94% 1.78%
2019 48.68% 23.37%
2018 2.52% -2.73%
2017 37.07% 15.84%
2016 13.73% 20.17%
2015 5.02% -0.7%
2014 18.01% 13.8%
2013 30.91% 30.09%
2012 14.05% 11.51%
2011 0.52% 7.28%
2010 12.74% 16.41%

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 SDY, returning 30.09% on an annual basis. The poorest year for SDY in the last ten years was 2018, with a yield of -2.73%. Most years the SPDR S&P Dividend ETF has given investors modest returns, such as in 2012, 2014, and 2017, when gains were 11.51%, 13.8%, and 15.84% respectively.

Portfolio Growth

VGT vs. SDY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VGT $10,000 $72,718 20.84%
SDY $10,000 $34,806 12.44%

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 SDY, the end total would have been $34,806. This equates to a $24,806 profit over 11 years and a compound annual growth rate (CAGR) of 12.44%.

VGT’s CAGR is 8.40 percentage points higher than that of SDY and as a result, would have yielded $37,912 more on a $10,000 investment. Thus, VGT outperformed SDY by 8.40% annually.


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