The Vanguard Information Technology Index Fund ETF Shares (VGT) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between VGT and VBK? And which fund is better?
The expense ratio of VGT is 0.03 percentage points higher than VBK’s (0.1% vs. 0.07%). VGT also has a higher exposure to the technology sector and a lower standard deviation. Overall, VGT has provided higher returns than VBK over the past ten years.
In this article, we’ll compare VGT vs. VBK. We’ll look at holdings and portfolio growth, as well as at their risk metrics and annual returns. Moreover, I’ll also discuss VGT’s and VBK’s performance, industry exposure, and fund composition and examine how these affect their overall returns.
Summary
| VGT | VBK | |
| Name | Vanguard Information Technology Index Fund ETF Shares | Vanguard Small-Cap Growth Index Fund ETF Shares |
| Category | Technology | Small Growth |
| Issuer | Vanguard | Vanguard |
| AUM | 54.13B | 37.89B |
| Avg. Return | 20.84% | 16.53% |
| Div. Yield | 0.66% | 0.45% |
| Expense Ratio | 0.1% | 0.07% |
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 Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.
VGT’s dividend yield is 0.21% higher than that of VBK (0.66% vs. 0.45%). Also, VGT yielded on average 4.31% more per year over the past decade (20.84% vs. 16.53%). The expense ratio of VGT is 0.03 percentage points higher than VBK’s (0.1% vs. 0.07%).
Fund Composition
Industry Exposure
| VGT | VBK | |
| Technology | 88.89% | 27.87% |
| Industrials | 1.67% | 13.19% |
| Energy | 0.0% | 1.77% |
| Communication Services | 0.61% | 3.24% |
| Utilities | 0.0% | 0.32% |
| Healthcare | 0.0% | 23.24% |
| Consumer Defensive | 0.0% | 3.83% |
| Real Estate | 0.0% | 7.87% |
| Financial Services | 8.83% | 4.05% |
| Consumer Cyclical | 0.0% | 12.13% |
| Basic Materials | 0.0% | 2.49% |
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 Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.
VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.
VGT is 61.02% more exposed to the Technology sector than VBK (88.89% vs 27.87%). VGT’s exposure to Financial Services and Industrials stocks is 4.78% higher and 11.52% lower respectively (8.83% vs. 4.05% and 1.67% vs. 13.19%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 23.83% less of the fund’s holdings compared to VBK (0.00% vs. 23.83%).
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%.
| VBK Holdings | Weight |
| Charles River Laboratories International Inc | 0.78% |
| Pool Corp | 0.73% |
| Bio-Techne Corp | 0.73% |
| Avantor Inc | 0.73% |
| PerkinElmer Inc | 0.72% |
| Entegris Inc | 0.7% |
| PTC Inc | 0.62% |
| Fair Isaac Corp | 0.57% |
| Bill.com Holdings Inc Ordinary Shares | 0.56% |
| Avalara Inc | 0.55% |
VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.
Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.
Risk Analysis
| VGT | VBK | |
| Mean Return | 1.76 | 1.22 |
| R-squared | 74.84 | 80.56 |
| Std. Deviation | 16.61 | 17.95 |
| Alpha | 10.41 | -2.81 |
| Beta | 1.02 | 1.18 |
| Sharpe Ratio | 1.23 | 0.78 |
| Treynor Ratio | 20.55 | 11.18 |
The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Mean Return of 1.76 with a Treynor Ratio of 20.55 and a R-squared of 74.84. Its Standard Deviation is 16.61 while VGT’s Sharpe Ratio is 1.23. Furthermore, the fund has a Alpha of 10.41 and a Beta of 1.02.
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Beta of 1.18 with a Mean Return of 1.22 and a Standard Deviation of 17.95. Its Sharpe Ratio is 0.78 while VBK’s R-squared is 80.56. Furthermore, the fund has a Treynor Ratio of 11.18 and a Alpha of -2.81.
VGT’s Mean Return is 0.54 points higher than that of VBK and its R-squared is 5.72 points lower. With a Standard Deviation of 16.61, VGT is slightly less volatile than VBK. The Alpha and Beta of VGT are 13.22 points higher and 0.16 points lower than VBK’s Alpha and Beta.
Performance
Annual Returns
| Year | VGT | VBK |
| 2020 | 45.94% | 35.29% |
| 2019 | 48.68% | 32.75% |
| 2018 | 2.52% | -5.68% |
| 2017 | 37.07% | 21.9% |
| 2016 | 13.73% | 10.74% |
| 2015 | 5.02% | -2.51% |
| 2014 | 18.01% | 4.02% |
| 2013 | 30.91% | 38.18% |
| 2012 | 14.05% | 17.67% |
| 2011 | 0.52% | -1.43% |
| 2010 | 12.74% | 30.87% |
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 VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VGT | $10,000 | $72,718 | 20.84% |
| VBK | $10,000 | $48,639 | 16.53% |
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 VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.
VGT’s CAGR is 4.31 percentage points higher than that of VBK and as a result, would have yielded $24,079 more on a $10,000 investment. Thus, VGT outperformed VBK by 4.31% annually.
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