VGT vs. VLUE: What’s The Difference?

The Vanguard Information Technology Index Fund ETF Shares (VGT) and the iShares MSCI USA Value Factor ETF (VLUE) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and VLUE is a iShares Large Value fund. So, what’s the difference between VGT and VLUE? And which fund is better?

The expense ratio of VGT is 0.05 percentage points lower than VLUE’s (0.1% vs. 0.15%). VGT also has a higher exposure to the technology sector and a higher standard deviation. Overall, VGT has provided higher returns than VLUE over the past ten years.

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

Summary

VGT VLUE
Name Vanguard Information Technology Index Fund ETF Shares iShares MSCI USA Value Factor ETF
Category Technology Large Value
Issuer Vanguard iShares
AUM 54.13B 15.95B
Avg. Return 20.84% 8.91%
Div. Yield 0.66% 1.89%
Expense Ratio 0.1% 0.15%

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 iShares MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.

VGT’s dividend yield is 1.23% lower than that of VLUE (0.66% vs. 1.89%). Also, VGT yielded on average 11.93% more per year over the past decade (20.84% vs. 8.91%). The expense ratio of VGT is 0.05 percentage points lower than VLUE’s (0.1% vs. 0.15%).

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Fund Composition

Industry Exposure

VGT vs. VLUE - Industry Exposure

VGT VLUE
Technology 88.89% 26.89%
Industrials 1.67% 9.14%
Energy 0.0% 2.42%
Communication Services 0.61% 10.39%
Utilities 0.0% 2.68%
Healthcare 0.0% 14.31%
Consumer Defensive 0.0% 7.22%
Real Estate 0.0% 3.19%
Financial Services 8.83% 10.96%
Consumer Cyclical 0.0% 10.66%
Basic Materials 0.0% 2.14%

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 iShares MSCI USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.

VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.

VGT is 62.00% more exposed to the Technology sector than VLUE (88.89% vs 26.89%). VGT’s exposure to Financial Services and Industrials stocks is 2.13% lower and 7.47% lower respectively (8.83% vs. 10.96% and 1.67% vs. 9.14%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 21.07% less of the fund’s holdings compared to VLUE (0.00% vs. 21.07%).

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%.

VLUE - Holdings

VLUE Holdings Weight
AT&T Inc 7.13%
Intel Corp 6.14%
General Motors Co 3.19%
Micron Technology Inc 3.14%
Cisco Systems Inc 3.05%
International Business Machines Corp 2.76%
Target Corp 2.38%
Citigroup Inc 2.32%
Ford Motor Co 2.23%
Pfizer Inc 2.17%

VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.

International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.

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Risk Analysis

VGT VLUE
Mean Return 1.76 0
R-squared 74.84 0
Std. Deviation 16.61 0
Alpha 10.41 0
Beta 1.02 0
Sharpe Ratio 1.23 0
Treynor Ratio 20.55 0

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

The iShares MSCI USA Value Factor ETF (VLUE) has a Treynor Ratio of 0 with a Sharpe Ratio of 0 and a Standard Deviation of 0. Its R-squared is 0 while VLUE’s Alpha is 0. Furthermore, the fund has a Mean Return of 0 and a Beta of 0.

VGT’s Mean Return is 1.76 points higher than that of VLUE and its R-squared is 74.84 points higher. With a Standard Deviation of 16.61, VGT is slightly more volatile than VLUE. The Alpha and Beta of VGT are 10.41 points higher and 1.02 points higher than VLUE’s Alpha and Beta.

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Performance

Annual Returns

VGT vs. VLUE - Annual Returns

Year VGT VLUE
2020 45.94% -0.32%
2019 48.68% 27.47%
2018 2.52% -11.18%
2017 37.07% 21.97%
2016 13.73% 15.68%
2015 5.02% -3.54%
2014 18.01% 12.29%
2013 30.91% 0.0%
2012 14.05% 0.0%
2011 0.52% 0.0%
2010 12.74% 0.0%

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 VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

VGT vs. VLUE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VGT $10,000 $42,977 20.84%
VLUE $10,000 $17,247 8.91%

A $10,000 investment in VGT would have resulted in a final balance of $42,977. This is a profit of $32,977 over 7 years and amounts to a compound annual growth rate (CAGR) of 20.84%.

With a $10,000 investment in VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.

VGT’s CAGR is 11.93 percentage points higher than that of VLUE and as a result, would have yielded $25,730 more on a $10,000 investment. Thus, VGT outperformed VLUE by 11.93% annually.


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