The Vanguard Information Technology Index Fund ETF Shares (VGT) and the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and VCIT is a Vanguard Corporate Bond fund. So, what’s the difference between VGT and VCIT? And which fund is better?
The expense ratio of VGT is 0.05 percentage points higher than VCIT’s (0.1% vs. 0.05%). VGT also has a high exposure to the technology sector while VCIT is mostly comprised of BBB bonds. Overall, VGT has provided higher returns than VCIT over the past ten years.
In this article, we’ll compare VGT vs. VCIT. We’ll look at performance and portfolio growth, as well as at their holdings and risk metrics. Moreover, I’ll also discuss VGT’s and VCIT’s fund composition, annual returns, and industry exposure and examine how these affect their overall returns.
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Summary
| VGT | VCIT | |
| Name | Vanguard Information Technology Index Fund ETF Shares | Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares |
| Category | Technology | Corporate Bond |
| Issuer | Vanguard | Vanguard |
| AUM | 54.13B | 48.39B |
| Avg. Return | 20.84% | 5.84% |
| Div. Yield | 0.66% | 2.33% |
| 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 Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) is a Corporate Bond fund that is issued by Vanguard. It currently has 48.39B total assets under management and has yielded an average annual return of 5.84% over the past 10 years. The fund has a dividend yield of 2.33% with an expense ratio of 0.05%.
VGT’s dividend yield is 1.67% lower than that of VCIT (0.66% vs. 2.33%). Also, VGT yielded on average 14.99% more per year over the past decade (20.84% vs. 5.84%). The expense ratio of VGT is 0.05 percentage points higher than VCIT’s (0.1% vs. 0.05%).
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Fund Composition
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%.
| VCIT Bond Sectors | Weight |
| BBB | 55.28% |
| A | 37.85% |
| AA | 5.22% |
| AAA | 1.57% |
| Below B | 0.08% |
| Others | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
VCIT’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and Below B at 55.28%, 37.85%, 5.22%, 1.57%, and 0.08%. The fund is less weighted towards Others (0.0%), B (0.0%), and BB (0.0%) rated bonds.
Risk Analysis
| VGT | VCIT | |
| Mean Return | 1.76 | 0.44 |
| R-squared | 74.84 | 63.18 |
| Std. Deviation | 16.61 | 5.08 |
| Alpha | 10.41 | 0.89 |
| Beta | 1.02 | 1.35 |
| Sharpe Ratio | 1.23 | 0.91 |
| Treynor Ratio | 20.55 | 3.43 |
The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Treynor Ratio of 20.55 with a Beta of 1.02 and a Alpha of 10.41. Its Sharpe Ratio is 1.23 while VGT’s Mean Return is 1.76. Furthermore, the fund has a R-squared of 74.84 and a Standard Deviation of 16.61.
The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a Mean Return of 0.44 with a Treynor Ratio of 3.43 and a Standard Deviation of 5.08. Its Alpha is 0.89 while VCIT’s Beta is 1.35. Furthermore, the fund has a R-squared of 63.18 and a Sharpe Ratio of 0.91.
VGT’s Mean Return is 1.32 points higher than that of VCIT and its R-squared is 11.66 points higher. With a Standard Deviation of 16.61, VGT is slightly more volatile than VCIT. The Alpha and Beta of VGT are 9.52 points higher and 0.33 points lower than VCIT’s Alpha and Beta.
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Performance
Annual Returns
| Year | VGT | VCIT |
| 2020 | 45.94% | 9.55% |
| 2019 | 48.68% | 13.97% |
| 2018 | 2.52% | -1.75% |
| 2017 | 37.07% | 5.5% |
| 2016 | 13.73% | 5.3% |
| 2015 | 5.02% | 0.88% |
| 2014 | 18.01% | 7.47% |
| 2013 | 30.91% | -1.8% |
| 2012 | 14.05% | 11.36% |
| 2011 | 0.52% | 7.94% |
| 2010 | 12.74% | 10.65% |
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 VCIT, returning 13.97% on an annual basis. The poorest year for VCIT in the last ten years was 2013, with a yield of -1.8%. Most years the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2011, when gains were 5.5%, 7.47%, and 7.94% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VGT | $10,000 | $64,500 | 20.84% |
| VCIT | $10,000 | $17,439 | 5.84% |
A $10,000 investment in VGT would have resulted in a final balance of $64,500. This is a profit of $54,500 over 10 years and amounts to a compound annual growth rate (CAGR) of 20.84%.
With a $10,000 investment in VCIT, the end total would have been $17,439. This equates to a $7,439 profit over 10 years and a compound annual growth rate (CAGR) of 5.84%.
VGT’s CAGR is 14.99 percentage points higher than that of VCIT and as a result, would have yielded $47,061 more on a $10,000 investment. Thus, VGT outperformed VCIT by 14.99% annually.
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