The Vanguard Information Technology Index Fund ETF Shares (VGT) and the Vanguard FTSE Europe Index Fund ETF Shares (VGK) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and VGK is a Vanguard Europe Stock fund. So, what’s the difference between VGT and VGK? And which fund is better?
The expense ratio of VGT is 0.02 percentage points higher than VGK’s (0.1% vs. 0.08%). VGT also has a higher exposure to the technology sector and a lower standard deviation. Overall, VGT has provided higher returns than VGK over the past ten years.
In this article, we’ll compare VGT vs. VGK. We’ll look at risk metrics and performance, as well as at their holdings and fund composition. Moreover, I’ll also discuss VGT’s and VGK’s industry exposure, annual returns, and portfolio growth and examine how these affect their overall returns.
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Summary
| VGT | VGK | |
| Name | Vanguard Information Technology Index Fund ETF Shares | Vanguard FTSE Europe Index Fund ETF Shares |
| Category | Technology | Europe Stock |
| Issuer | Vanguard | Vanguard |
| AUM | 54.13B | 25.7B |
| Avg. Return | 20.84% | 6.68% |
| Div. Yield | 0.66% | 2.52% |
| Expense Ratio | 0.1% | 0.08% |
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 Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% with an expense ratio of 0.08%.
VGT’s dividend yield is 1.86% lower than that of VGK (0.66% vs. 2.52%). Also, VGT yielded on average 14.16% more per year over the past decade (20.84% vs. 6.68%). The expense ratio of VGT is 0.02 percentage points higher than VGK’s (0.1% vs. 0.08%).
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Fund Composition
Industry Exposure
| VGT | VGK | |
| Technology | 88.89% | 8.3% |
| Industrials | 1.67% | 15.58% |
| Energy | 0.0% | 4.3% |
| Communication Services | 0.61% | 5.09% |
| Utilities | 0.0% | 3.89% |
| Healthcare | 0.0% | 13.76% |
| Consumer Defensive | 0.0% | 11.39% |
| Real Estate | 0.0% | 2.57% |
| Financial Services | 8.83% | 15.85% |
| Consumer Cyclical | 0.0% | 11.6% |
| Basic Materials | 0.0% | 7.67% |
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 Europe Index Fund ETF Shares (VGK) has the most exposure to the Financial Services sector at 15.85%. This is followed by Industrials and Healthcare at 15.58% and 13.76% respectively. Utilities (3.89%), Energy (4.3%), and Communication Services (5.09%) only make up 13.28% of the fund’s total assets.
VGK’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.67%, 8.3%, 11.39%, 11.6%, and 13.76%.
VGT is 80.59% more exposed to the Technology sector than VGK (88.89% vs 8.3%). VGT’s exposure to Financial Services and Industrials stocks is 7.02% lower and 13.91% lower respectively (8.83% vs. 15.85% and 1.67% vs. 15.58%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 25.56% less of the fund’s holdings compared to VGK (0.00% vs. 25.56%).
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%.
| VGK Holdings | Weight |
| Nestle SA | 2.82% |
| ASML Holding NV | 2.2% |
| Roche Holding AG | 2.13% |
| LVMH Moet Hennessy Louis Vuitton SE | 1.58% |
| Novartis AG | 1.55% |
| AstraZeneca PLC | 1.27% |
| SAP SE | 1.25% |
| Unilever PLC | 1.23% |
| Novo Nordisk A/S B | 1.09% |
| Siemens AG | 0.96% |
VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.
AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.
Risk Analysis
| VGT | VGK | |
| Mean Return | 1.76 | 0.61 |
| R-squared | 74.84 | 92.76 |
| Std. Deviation | 16.61 | 16.65 |
| Alpha | 10.41 | 0.45 |
| Beta | 1.02 | 1.06 |
| Sharpe Ratio | 1.23 | 0.4 |
| Treynor Ratio | 20.55 | 5.12 |
The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Mean Return of 1.76 with a Standard Deviation of 16.61 and a Sharpe Ratio of 1.23. Its Alpha is 10.41 while VGT’s R-squared is 74.84. Furthermore, the fund has a Beta of 1.02 and a Treynor Ratio of 20.55.
The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Treynor Ratio of 5.12 with a Beta of 1.06 and a Mean Return of 0.61. Its Sharpe Ratio is 0.4 while VGK’s R-squared is 92.76. Furthermore, the fund has a Standard Deviation of 16.65 and a Alpha of 0.45.
VGT’s Mean Return is 1.15 points higher than that of VGK and its R-squared is 17.92 points lower. With a Standard Deviation of 16.61, VGT is slightly less volatile than VGK. The Alpha and Beta of VGT are 9.96 points higher and 0.04 points lower than VGK’s Alpha and Beta.
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Performance
Annual Returns
| Year | VGT | VGK |
| 2020 | 45.94% | 6.5% |
| 2019 | 48.68% | 24.26% |
| 2018 | 2.52% | -14.79% |
| 2017 | 37.07% | 27.06% |
| 2016 | 13.73% | -0.59% |
| 2015 | 5.02% | -1.87% |
| 2014 | 18.01% | -6.56% |
| 2013 | 30.91% | 24.93% |
| 2012 | 14.05% | 21.01% |
| 2011 | 0.52% | -11.49% |
| 2010 | 12.74% | 5.01% |
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 VGK, returning 27.06% on an annual basis. The poorest year for VGK in the last ten years was 2018, with a yield of -14.79%. Most years the Vanguard FTSE Europe Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were -0.59%, 5.01%, and 6.5% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VGT | $10,000 | $72,718 | 20.84% |
| VGK | $10,000 | $18,350 | 6.68% |
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 VGK, the end total would have been $18,350. This equates to a $8,350 profit over 11 years and a compound annual growth rate (CAGR) of 6.68%.
VGT’s CAGR is 14.16 percentage points higher than that of VGK and as a result, would have yielded $54,368 more on a $10,000 investment. Thus, VGT outperformed VGK by 14.16% annually.
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