Skip to content

VGT vs. TLT: What’s The Difference?

The Vanguard Information Technology Index Fund ETF Shares (VGT) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and TLT is a iShares Long Government fund. So, what’s the difference between VGT and TLT? And which fund is better?

The expense ratio of VGT is 0.05 percentage points lower than TLT’s (0.1% vs. 0.15%). VGT also has a high exposure to the technology sector while TLT is mostly comprised of AAA bonds. Overall, VGT has provided higher returns than TLT over the past ten years.

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

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

VGTTLT
NameVanguard Information Technology Index Fund ETF SharesiShares 20+ Year Treasury Bond ETF
CategoryTechnologyLong Government
IssuerVanguardiShares
AUM54.13B15.15B
Avg. Return20.84%9.00%
Div. Yield0.66%1.5%
Expense Ratio0.1%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 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.

VGT’s dividend yield is 0.84% lower than that of TLT (0.66% vs. 1.5%). Also, VGT yielded on average 11.84% more per year over the past decade (20.84% vs. 9.00%). The expense ratio of VGT is 0.05 percentage points lower than TLT’s (0.1% vs. 0.15%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

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%.

TLT - Holdings

TLT Bond SectorsWeight
AAA100.0%
Others0.0%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

TLT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

VGTTLT
Mean Return1.760.63
R-squared74.8468.76
Std. Deviation16.6112.76
Alpha10.41-2.83
Beta1.023.54
Sharpe Ratio1.230.55
Treynor Ratio20.551.82

The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Mean Return of 1.76 with a R-squared of 74.84 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 Beta of 1.02 and a Treynor Ratio of 20.55.

The iShares 20+ Year Treasury Bond ETF (TLT) has a Treynor Ratio of 1.82 with a Mean Return of 0.63 and a R-squared of 68.76. Its Standard Deviation is 12.76 while TLT’s Sharpe Ratio is 0.55. Furthermore, the fund has a Alpha of -2.83 and a Beta of 3.54.

VGT’s Mean Return is 1.13 points higher than that of TLT and its R-squared is 6.08 points higher. With a Standard Deviation of 16.61, VGT is slightly more volatile than TLT. The Alpha and Beta of VGT are 13.24 points higher and 2.52 points lower than TLT’s Alpha and Beta.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

VGT vs. TLT - Annual Returns

YearVGTTLT
202045.94%17.92%
201948.68%14.93%
20182.52%-2.07%
201737.07%8.92%
201613.73%1.36%
20155.02%-1.65%
201418.01%27.35%
201330.91%-13.91%
201214.05%3.25%
20110.52%33.6%
201012.74%9.25%

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 2011 was the strongest year for TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% respectively.

Portfolio Growth

VGT vs. TLT - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VGT$10,000$72,71820.84%
TLT$10,000$23,8099.00%

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 TLT, the end total would have been $23,809. This equates to a $13,809 profit over 11 years and a compound annual growth rate (CAGR) of 9.00%.

VGT’s CAGR is 11.84 percentage points higher than that of TLT and as a result, would have yielded $48,909 more on a $10,000 investment. Thus, VGT outperformed TLT by 11.84% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply

Your email address will not be published.