VGT vs. VBR: What’s The Difference?

The Vanguard Information Technology Index Fund ETF Shares (VGT) and the Vanguard Small-Cap Value Index Fund ETF Shares (VBR) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and VBR is a Vanguard Small Value fund. So, what’s the difference between VGT and VBR? And which fund is better?

The expense ratio of VGT is 0.03 percentage points higher than VBR’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 VBR over the past ten years.

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

Summary

VGT VBR
Name Vanguard Information Technology Index Fund ETF Shares Vanguard Small-Cap Value Index Fund ETF Shares
Category Technology Small Value
Issuer Vanguard Vanguard
AUM 54.13B 48.08B
Avg. Return 20.84% 12.28%
Div. Yield 0.66% 1.6%
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 Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.

VGT’s dividend yield is 0.94% lower than that of VBR (0.66% vs. 1.6%). Also, VGT yielded on average 8.55% more per year over the past decade (20.84% vs. 12.28%). The expense ratio of VGT is 0.03 percentage points higher than VBR’s (0.1% vs. 0.07%).

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Fund Composition

Industry Exposure

VGT vs. VBR - Industry Exposure

VGT VBR
Technology 88.89% 8.39%
Industrials 1.67% 18.44%
Energy 0.0% 5.15%
Communication Services 0.61% 1.77%
Utilities 0.0% 3.65%
Healthcare 0.0% 7.16%
Consumer Defensive 0.0% 4.36%
Real Estate 0.0% 10.92%
Financial Services 8.83% 20.04%
Consumer Cyclical 0.0% 13.82%
Basic Materials 0.0% 6.31%

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 Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.

VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.

VGT is 80.50% more exposed to the Technology sector than VBR (88.89% vs 8.39%). VGT’s exposure to Financial Services and Industrials stocks is 11.21% lower and 16.77% lower respectively (8.83% vs. 20.04% and 1.67% vs. 18.44%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 29.10% less of the fund’s holdings compared to VBR (0.00% vs. 29.10%).

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%.

VBR - Holdings

VBR Holdings Weight
Diamondback Energy Inc 0.55%
VICI Properties Inc Ordinary Shares 0.54%
IDEX Corp 0.54%
Nuance Communications Inc 0.5%
Molina Healthcare Inc 0.48%
Signature Bank 0.46%
Novavax Inc 0.44%
Howmet Aerospace Inc 0.44%
Apollo Global Management Inc Class A 0.42%
Brown & Brown Inc 0.41%

VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.

Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.

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Risk Analysis

VGT VBR
Mean Return 1.76 1.08
R-squared 74.84 82.2
Std. Deviation 16.61 18.37
Alpha 10.41 -5.09
Beta 1.02 1.23
Sharpe Ratio 1.23 0.67
Treynor Ratio 20.55 9.15

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

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Treynor Ratio of 9.15 with a Beta of 1.23 and a Standard Deviation of 18.37. Its R-squared is 82.2 while VBR’s Alpha is -5.09. Furthermore, the fund has a Sharpe Ratio of 0.67 and a Mean Return of 1.08.

VGT’s Mean Return is 0.68 points higher than that of VBR and its R-squared is 7.36 points lower. With a Standard Deviation of 16.61, VGT is slightly less volatile than VBR. The Alpha and Beta of VGT are 15.50 points higher and 0.21 points lower than VBR’s Alpha and Beta.

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Performance

Annual Returns

VGT vs. VBR - Annual Returns

Year VGT VBR
2020 45.94% 5.82%
2019 48.68% 22.76%
2018 2.52% -12.22%
2017 37.07% 11.79%
2016 13.73% 24.8%
2015 5.02% -4.67%
2014 18.01% 10.55%
2013 30.91% 36.57%
2012 14.05% 18.78%
2011 0.52% -4.05%
2010 12.74% 24.97%

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 VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% respectively.

Portfolio Growth

VGT vs. VBR - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VGT $10,000 $72,718 20.84%
VBR $10,000 $32,611 12.28%

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 VBR, the end total would have been $32,611. This equates to a $22,611 profit over 11 years and a compound annual growth rate (CAGR) of 12.28%.

VGT’s CAGR is 8.55 percentage points higher than that of VBR and as a result, would have yielded $40,107 more on a $10,000 investment. Thus, VGT outperformed VBR by 8.55% annually.


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