VGT vs. VHT: What’s The Difference?

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

VGT and VHT have the same expense ratio: 0.1%. VGT also has a higher exposure to the technology sector and a higher standard deviation. Overall, VGT has provided higher returns than VHT over the past ten years.

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

Summary

VGT VHT
Name Vanguard Information Technology Index Fund ETF Shares Vanguard Health Care Index Fund ETF Shares
Category Technology Health
Issuer Vanguard Vanguard
AUM 54.13B 17.94B
Avg. Return 20.84% 16.04%
Div. Yield 0.66% 1.15%
Expense Ratio 0.1% 0.1%

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 Health Care Index Fund ETF Shares (VHT) is a Health fund that is issued by Vanguard. It currently has 17.94B total assets under management and has yielded an average annual return of 16.04% over the past 10 years. The fund has a dividend yield of 1.15% with an expense ratio of 0.1%.

VGT’s dividend yield is 0.49% lower than that of VHT (0.66% vs. 1.15%). Also, VGT yielded on average 4.80% more per year over the past decade (20.84% vs. 16.04%). VGT and VHT have the same expense ratio: 0.1%.

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Fund Composition

Industry Exposure

VGT vs. VHT - Industry Exposure

VGT VHT
Technology 88.89% 0.05%
Industrials 1.67% 0.05%
Energy 0.0% 0.0%
Communication Services 0.61% 0.0%
Utilities 0.0% 0.0%
Healthcare 0.0% 99.57%
Consumer Defensive 0.0% 0.0%
Real Estate 0.0% 0.0%
Financial Services 8.83% 0.02%
Consumer Cyclical 0.0% 0.0%
Basic Materials 0.0% 0.31%

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 Health Care Index Fund ETF Shares (VHT) has the most exposure to the Healthcare sector at 99.57%. This is followed by Basic Materials and Technology at 0.31% and 0.05% respectively. Real Estate (0.0%), Consumer Defensive (0.0%), and Utilities (0.0%) only make up 0.00% of the fund’s total assets.

VHT’s mid-section with moderate exposure is comprised of Communication Services, Energy, Financial Services, Industrials, and Technology stocks at 0.0%, 0.0%, 0.02%, 0.05%, and 0.05%.

VGT is 88.84% more exposed to the Technology sector than VHT (88.89% vs 0.05%). VGT’s exposure to Financial Services and Industrials stocks is 8.81% higher and 1.62% higher respectively (8.83% vs. 0.02% and 1.67% vs. 0.05%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 0.00% less of the fund’s holdings compared to VHT (0.00% vs. 0.00%).

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%.

VHT - Holdings

VHT Holdings Weight
Johnson & Johnson 7.34%
UnitedHealth Group Inc 6.44%
Pfizer Inc 3.7%
Abbott Laboratories 3.48%
Thermo Fisher Scientific Inc 3.37%
AbbVie Inc 3.37%
Merck & Co Inc 3.33%
Eli Lilly and Co 3.17%
Danaher Corp 2.91%
Medtronic PLC 2.83%

VHT’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and Thermo Fisher Scientific Inc at 7.34%, 6.44%, 3.7%, 3.48%, and 3.37%.

AbbVie Inc (3.37%), Merck & Co Inc (3.33%), and Eli Lilly and Co (3.17%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the VHT’s holdings at 2.91% and 2.83%.

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Risk Analysis

VGT VHT
Mean Return 1.76 1.33
R-squared 74.84 59.86
Std. Deviation 16.61 13.58
Alpha 10.41 7.99
Beta 1.02 0.75
Sharpe Ratio 1.23 1.13
Treynor Ratio 20.55 20.74

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

The Vanguard Health Care Index Fund ETF Shares (VHT) has a R-squared of 59.86 with a Sharpe Ratio of 1.13 and a Beta of 0.75. Its Treynor Ratio is 20.74 while VHT’s Standard Deviation is 13.58. Furthermore, the fund has a Alpha of 7.99 and a Mean Return of 1.33.

VGT’s Mean Return is 0.43 points higher than that of VHT and its R-squared is 14.98 points higher. With a Standard Deviation of 16.61, VGT is slightly more volatile than VHT. The Alpha and Beta of VGT are 2.42 points higher and 0.27 points higher than VHT’s Alpha and Beta.

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Performance

Annual Returns

VGT vs. VHT - Annual Returns

Year VGT VHT
2020 45.94% 18.21%
2019 48.68% 21.97%
2018 2.52% 5.55%
2017 37.07% 23.34%
2016 13.73% -3.33%
2015 5.02% 7.22%
2014 18.01% 25.38%
2013 30.91% 42.67%
2012 14.05% 19.1%
2011 0.52% 10.57%
2010 12.74% 5.75%

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 VHT, returning 42.67% on an annual basis. The poorest year for VHT in the last ten years was 2016, with a yield of -3.33%. Most years the Vanguard Health Care Index Fund ETF Shares has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 10.57%, 18.21%, and 19.1% respectively.

Portfolio Growth

VGT vs. VHT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VGT $10,000 $72,718 20.84%
VHT $10,000 $48,464 16.04%

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 VHT, the end total would have been $48,464. This equates to a $38,464 profit over 11 years and a compound annual growth rate (CAGR) of 16.04%.

VGT’s CAGR is 4.80 percentage points higher than that of VHT and as a result, would have yielded $24,254 more on a $10,000 investment. Thus, VGT outperformed VHT by 4.80% annually.


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