The Vanguard Information Technology Index Fund ETF Shares (VGT) and the iShares MSCI USA Min Vol Factor ETF (USMV) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and USMV is a iShares Large Blend fund. So, what’s the difference between VGT and USMV? And which fund is better?
The expense ratio of VGT is 0.05 percentage points lower than USMV’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 USMV over the past ten years.
In this article, we’ll compare VGT vs. USMV. We’ll look at portfolio growth and performance, as well as at their holdings and risk metrics. Moreover, I’ll also discuss VGT’s and USMV’s industry exposure, annual returns, and fund composition and examine how these affect their overall returns.
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Summary
| VGT | USMV | |
| Name | Vanguard Information Technology Index Fund ETF Shares | iShares MSCI USA Min Vol Factor ETF |
| Category | Technology | Large Blend |
| Issuer | Vanguard | iShares |
| AUM | 54.13B | 27.6B |
| Avg. Return | 20.84% | 13.89% |
| Div. Yield | 0.66% | 1.5% |
| 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 Min Vol Factor ETF (USMV) is a Large Blend fund that is issued by iShares. It currently has 27.6B total assets under management and has yielded an average annual return of 13.89% 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 USMV (0.66% vs. 1.5%). Also, VGT yielded on average 6.94% more per year over the past decade (20.84% vs. 13.89%). The expense ratio of VGT is 0.05 percentage points lower than USMV’s (0.1% vs. 0.15%).
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Fund Composition
Industry Exposure
| VGT | USMV | |
| Technology | 88.89% | 20.53% |
| Industrials | 1.67% | 10.51% |
| Energy | 0.0% | 0.21% |
| Communication Services | 0.61% | 11.03% |
| Utilities | 0.0% | 6.93% |
| Healthcare | 0.0% | 18.42% |
| Consumer Defensive | 0.0% | 12.82% |
| Real Estate | 0.0% | 2.73% |
| Financial Services | 8.83% | 9.65% |
| Consumer Cyclical | 0.0% | 5.53% |
| Basic Materials | 0.0% | 1.65% |
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 Min Vol Factor ETF (USMV) has the most exposure to the Technology sector at 20.53%. This is followed by Healthcare and Consumer Defensive at 18.42% and 12.82% respectively. Basic Materials (1.65%), Real Estate (2.73%), and Consumer Cyclical (5.53%) only make up 9.91% of the fund’s total assets.
USMV’s mid-section with moderate exposure is comprised of Utilities, Financial Services, Industrials, Communication Services, and Consumer Defensive stocks at 6.93%, 9.65%, 10.51%, 11.03%, and 12.82%.
VGT is 68.36% more exposed to the Technology sector than USMV (88.89% vs 20.53%). VGT’s exposure to Financial Services and Industrials stocks is 0.82% lower and 8.84% lower respectively (8.83% vs. 9.65% and 1.67% vs. 10.51%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 21.08% less of the fund’s holdings compared to USMV (0.00% vs. 21.08%).
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%.
| USMV Holdings | Weight |
| Eli Lilly and Co | 1.64% |
| Microsoft Corp | 1.62% |
| T-Mobile US Inc | 1.51% |
| Accenture PLC Class A | 1.51% |
| Visa Inc Class A | 1.49% |
| Waste Management Inc | 1.45% |
| Adobe Inc | 1.45% |
| The Kroger Co | 1.44% |
| Johnson & Johnson | 1.42% |
| Gilead Sciences Inc | 1.42% |
USMV’s Top Holdings are Eli Lilly and Co, Microsoft Corp, T-Mobile US Inc, Accenture PLC Class A, and Visa Inc Class A at 1.64%, 1.62%, 1.51%, 1.51%, and 1.49%.
Waste Management Inc (1.45%), Adobe Inc (1.45%), and The Kroger Co (1.44%) have a slightly smaller but still significant weight. Johnson & Johnson and Gilead Sciences Inc are also represented in the USMV’s holdings at 1.42% and 1.42%.
Risk Analysis
| VGT | USMV | |
| 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 Mean Return of 1.76 with a Alpha of 10.41 and a Beta of 1.02. Its Standard Deviation is 16.61 while VGT’s R-squared is 74.84. Furthermore, the fund has a Sharpe Ratio of 1.23 and a Treynor Ratio of 20.55.
The iShares MSCI USA Min Vol Factor ETF (USMV) has a Mean Return of 0 with a Standard Deviation of 0 and a R-squared of 0. Its Beta is 0 while USMV’s Sharpe Ratio is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Alpha of 0.
VGT’s Mean Return is 1.76 points higher than that of USMV and its R-squared is 74.84 points higher. With a Standard Deviation of 16.61, VGT is slightly more volatile than USMV. The Alpha and Beta of VGT are 10.41 points higher and 1.02 points higher than USMV’s Alpha and Beta.
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Performance
Annual Returns
| Year | VGT | USMV |
| 2020 | 45.94% | 5.6% |
| 2019 | 48.68% | 27.77% |
| 2018 | 2.52% | 1.36% |
| 2017 | 37.07% | 18.97% |
| 2016 | 13.73% | 10.5% |
| 2015 | 5.02% | 5.5% |
| 2014 | 18.01% | 16.34% |
| 2013 | 30.91% | 25.11% |
| 2012 | 14.05% | 11.04% |
| 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 2019 was the strongest year for USMV, returning 27.77% on an annual basis. The poorest year for USMV in the last ten years was 2011, with a yield of 0.0%. Most years the iShares MSCI USA Min Vol Factor ETF has given investors modest returns, such as in 2020, 2016, and 2012, when gains were 5.6%, 10.5%, and 11.04% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VGT | $10,000 | $56,262 | 20.84% |
| USMV | $10,000 | $27,607 | 13.89% |
A $10,000 investment in VGT would have resulted in a final balance of $56,262. This is a profit of $46,262 over 8 years and amounts to a compound annual growth rate (CAGR) of 20.84%.
With a $10,000 investment in USMV, the end total would have been $27,607. This equates to a $17,607 profit over 8 years and a compound annual growth rate (CAGR) of 13.89%.
VGT’s CAGR is 6.94 percentage points higher than that of USMV and as a result, would have yielded $28,655 more on a $10,000 investment. Thus, VGT outperformed USMV by 6.94% annually.
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