The Vanguard Information Technology Index Fund ETF Shares (VGT) and the Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and VEU is a Vanguard Foreign Large Blend fund. So, what’s the difference between VGT and VEU? And which fund is better?
The expense ratio of VGT is 0.02 percentage points higher than VEU’s (0.1% vs. 0.08%). VGT also has a higher exposure to the technology sector and a higher standard deviation. Overall, VGT has provided higher returns than VEU over the past ten years.
In this article, we’ll compare VGT vs. VEU. We’ll look at holdings and performance, as well as at their risk metrics and industry exposure. Moreover, I’ll also discuss VGT’s and VEU’s fund composition, portfolio growth, and annual returns and examine how these affect their overall returns.
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|Name||Vanguard Information Technology Index Fund ETF Shares||Vanguard FTSE All-World ex-US Index Fund ETF Shares|
|Category||Technology||Foreign Large Blend|
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 FTSE All-World ex-US Index Fund ETF Shares (VEU) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 53.64B total assets under management and has yielded an average annual return of 6.64% over the past 10 years. The fund has a dividend yield of 2.31% with an expense ratio of 0.08%.
VGT’s dividend yield is 1.65% lower than that of VEU (0.66% vs. 2.31%). Also, VGT yielded on average 14.20% more per year over the past decade (20.84% vs. 6.64%). The expense ratio of VGT is 0.02 percentage points higher than VEU’s (0.1% vs. 0.08%).
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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 FTSE All-World ex-US Index Fund ETF Shares (VEU) has the most exposure to the Financial Services sector at 18.46%. This is followed by Technology and Consumer Cyclical at 12.94% and 12.57% respectively. Real Estate (3.04%), Energy (4.69%), and Communication Services (7.44%) only make up 15.17% of the fund’s total assets.
VEU’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Healthcare, Industrials, and Consumer Cyclical stocks at 8.17%, 8.28%, 9.34%, 12.19%, and 12.57%.
VGT is 75.95% more exposed to the Technology sector than VEU (88.89% vs 12.94%). VGT’s exposure to Financial Services and Industrials stocks is 9.63% lower and 10.52% lower respectively (8.83% vs. 18.46% and 1.67% vs. 12.19%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 23.89% less of the fund’s holdings compared to VEU (0.00% vs. 23.89%).
|Visa Inc Class A||3.16%|
|PayPal Holdings Inc||2.76%|
|Mastercard Inc Class A||2.76%|
|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%.
|Tencent Holdings Ltd||1.57%|
|Alibaba Group Holding Ltd Ordinary Shares||1.4%|
|Taiwan Semiconductor Manufacturing Co Ltd||0.98%|
|ASML Holding NV||0.95%|
|Taiwan Semiconductor Manufacturing Co Ltd ADR||0.91%|
|Roche Holding AG||0.91%|
|Toyota Motor Corp||0.75%|
|LVMH Moet Hennessy Louis Vuitton SE||0.68%|
VEU’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, Taiwan Semiconductor Manufacturing Co Ltd, and ASML Holding NV at 1.57%, 1.4%, 1.22%, 0.98%, and 0.95%.
Taiwan Semiconductor Manufacturing Co Ltd ADR (0.91%), Roche Holding AG (0.91%), and Toyota Motor Corp (0.75%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VEU’s holdings at 0.68% and 0.67%.
The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Standard Deviation of 16.61 with a Mean Return of 1.76 and a Alpha of 10.41. Its Sharpe Ratio is 1.23 while VGT’s Beta is 1.02. Furthermore, the fund has a Treynor Ratio of 20.55 and a R-squared of 74.84.
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Standard Deviation of 15.08 with a Sharpe Ratio of 0.4 and a Treynor Ratio of 5.12. Its R-squared is 98.44 while VEU’s Mean Return is 0.56. Furthermore, the fund has a Alpha of 0.28 and a Beta of 0.99.
VGT’s Mean Return is 1.20 points higher than that of VEU and its R-squared is 23.60 points lower. With a Standard Deviation of 16.61, VGT is slightly more volatile than VEU. The Alpha and Beta of VGT are 10.13 points higher and 0.03 points higher than VEU’s Alpha and Beta.
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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 2017 was the strongest year for VEU, returning 27.27% on an annual basis. The poorest year for VEU in the last ten years was 2011, with a yield of -14.25%. Most years the Vanguard FTSE All-World ex-US Index Fund ETF Shares has given investors modest returns, such as in 2016, 2020, and 2010, when gains were 4.77%, 11.39%, and 11.85% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 VEU, the end total would have been $18,507. This equates to a $8,507 profit over 11 years and a compound annual growth rate (CAGR) of 6.64%.
VGT’s CAGR is 14.20 percentage points higher than that of VEU and as a result, would have yielded $54,211 more on a $10,000 investment. Thus, VGT outperformed VEU by 14.20% annually.
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