The Vanguard Information Technology Index Fund ETF Shares (VGT) and the Vanguard Small-Cap Index Fund ETF Shares (VB) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and VB is a Vanguard Small Blend fund. So, what’s the difference between VGT and VB? And which fund is better?
The expense ratio of VGT is 0.05 percentage points higher than VB’s (0.1% vs. 0.05%). VGT also has a higher exposure to the technology sector and a lower standard deviation. Overall, VGT has provided higher returns than VB over the past ten years.
In this article, we’ll compare VGT vs. VB. We’ll look at portfolio growth and fund composition, as well as at their holdings and performance. Moreover, I’ll also discuss VGT’s and VB’s industry exposure, risk metrics, and annual returns and examine how these affect their overall returns.
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Summary
| VGT | VB | |
| Name | Vanguard Information Technology Index Fund ETF Shares | Vanguard Small-Cap Index Fund ETF Shares |
| Category | Technology | Small Blend |
| Issuer | Vanguard | Vanguard |
| AUM | 54.13B | 137.72B |
| Avg. Return | 20.84% | 14.25% |
| Div. Yield | 0.66% | 1.14% |
| Expense Ratio | 0.1% | 0.05% |
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 Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.05%.
VGT’s dividend yield is 0.48% lower than that of VB (0.66% vs. 1.14%). Also, VGT yielded on average 6.58% more per year over the past decade (20.84% vs. 14.25%). The expense ratio of VGT is 0.05 percentage points higher than VB’s (0.1% vs. 0.05%).
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Fund Composition
Industry Exposure
| VGT | VB | |
| Technology | 88.89% | 16.85% |
| Industrials | 1.67% | 16.11% |
| Energy | 0.0% | 3.67% |
| Communication Services | 0.61% | 2.4% |
| Utilities | 0.0% | 2.19% |
| Healthcare | 0.0% | 14.34% |
| Consumer Defensive | 0.0% | 4.14% |
| Real Estate | 0.0% | 9.56% |
| Financial Services | 8.83% | 13.06% |
| Consumer Cyclical | 0.0% | 13.03% |
| Basic Materials | 0.0% | 4.63% |
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 Vanguard Small-Cap Index Fund ETF Shares (VB) has the most exposure to the Technology sector at 16.85%. This is followed by Industrials and Healthcare at 16.11% and 14.34% respectively. Communication Services (2.4%), Energy (3.67%), and Consumer Defensive (4.14%) only make up 10.21% of the fund’s total assets.
VB’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Healthcare stocks at 4.63%, 9.56%, 13.03%, 13.06%, and 14.34%.
VGT is 72.04% more exposed to the Technology sector than VB (88.89% vs 16.85%). VGT’s exposure to Financial Services and Industrials stocks is 4.23% lower and 14.44% lower respectively (8.83% vs. 13.06% and 1.67% vs. 16.11%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 26.73% less of the fund’s holdings compared to VB (0.00% vs. 26.73%).
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%.
| VB Holdings | Weight |
| Charles River Laboratories International Inc | 0.34% |
| Pool Corp | 0.32% |
| Bio-Techne Corp | 0.32% |
| Avantor Inc | 0.32% |
| PerkinElmer Inc | 0.31% |
| Diamondback Energy Inc | 0.31% |
| VICI Properties Inc Ordinary Shares | 0.3% |
| IDEX Corp | 0.3% |
| Entegris Inc | 0.3% |
| Novavax Inc | 0.29% |
VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.
Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.
Risk Analysis
| VGT | VB | |
| Mean Return | 1.76 | 1.15 |
| R-squared | 74.84 | 85.03 |
| Std. Deviation | 16.61 | 17.82 |
| Alpha | 10.41 | -4.02 |
| Beta | 1.02 | 1.21 |
| Sharpe Ratio | 1.23 | 0.74 |
| Treynor Ratio | 20.55 | 10.15 |
The Vanguard Information Technology Index Fund ETF Shares (VGT) has a R-squared of 74.84 with a Treynor Ratio of 20.55 and a Beta of 1.02. Its Standard Deviation is 16.61 while VGT’s Sharpe Ratio is 1.23. Furthermore, the fund has a Mean Return of 1.76 and a Alpha of 10.41.
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Standard Deviation of 17.82 with a Treynor Ratio of 10.15 and a R-squared of 85.03. Its Beta is 1.21 while VB’s Alpha is -4.02. Furthermore, the fund has a Mean Return of 1.15 and a Sharpe Ratio of 0.74.
VGT’s Mean Return is 0.61 points higher than that of VB and its R-squared is 10.19 points lower. With a Standard Deviation of 16.61, VGT is slightly less volatile than VB. The Alpha and Beta of VGT are 14.43 points higher and 0.19 points lower than VB’s Alpha and Beta.
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Performance
Annual Returns
| Year | VGT | VB |
| 2020 | 45.94% | 19.08% |
| 2019 | 48.68% | 27.37% |
| 2018 | 2.52% | -9.3% |
| 2017 | 37.07% | 16.24% |
| 2016 | 13.73% | 18.31% |
| 2015 | 5.02% | -3.65% |
| 2014 | 18.01% | 7.51% |
| 2013 | 30.91% | 37.8% |
| 2012 | 14.05% | 18.22% |
| 2011 | 0.52% | -2.68% |
| 2010 | 12.74% | 27.89% |
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 VB, returning 37.8% on an annual basis. The poorest year for VB in the last ten years was 2018, with a yield of -9.3%. Most years the Vanguard Small-Cap Index Fund ETF Shares has given investors modest returns, such as in 2017, 2012, and 2016, when gains were 16.24%, 18.22%, and 18.31% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VGT | $10,000 | $72,718 | 20.84% |
| VB | $10,000 | $39,734 | 14.25% |
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 VB, the end total would have been $39,734. This equates to a $29,734 profit over 11 years and a compound annual growth rate (CAGR) of 14.25%.
VGT’s CAGR is 6.58 percentage points higher than that of VB and as a result, would have yielded $32,984 more on a $10,000 investment. Thus, VGT outperformed VB by 6.58% annually.
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