The Vanguard Information Technology Index Fund ETF Shares (VGT) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between VGT and VTIP? And which fund is better?
The expense ratio of VGT is 0.05 percentage points higher than VTIP’s (0.1% vs. 0.05%). VGT also has a high exposure to the technology sector while VTIP is mostly comprised of AAA bonds. Overall, VGT has provided higher returns than VTIP over the past ten years.
In this article, we’ll compare VGT vs. VTIP. We’ll look at holdings and fund composition, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss VGT’s and VTIP’s performance, risk metrics, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Information Technology Index Fund ETF Shares||Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares|
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 Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.
VGT’s dividend yield is 0.69% lower than that of VTIP (0.66% vs. 1.35%). Also, VGT yielded on average 19.04% more per year over the past decade (20.84% vs. 1.79%). The expense ratio of VGT is 0.05 percentage points higher than VTIP’s (0.1% vs. 0.05%).
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|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%.
|VTIP Bond Sectors||Weight|
VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
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The Vanguard Information Technology Index Fund ETF Shares (VGT) has a R-squared of 74.84 with a Alpha of 10.41 and a Treynor Ratio of 20.55. Its Mean Return is 1.76 while VGT’s Standard Deviation is 16.61. Furthermore, the fund has a Sharpe Ratio of 1.23 and a Beta of 1.02.
The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Mean Return of 0 with a Beta of 0 and a Sharpe Ratio of 0. Its Alpha is 0 while VTIP’s Standard Deviation is 0. Furthermore, the fund has a R-squared of 0 and a Treynor Ratio of 0.
VGT’s Mean Return is 1.76 points higher than that of VTIP and its R-squared is 74.84 points higher. With a Standard Deviation of 16.61, VGT is slightly more volatile than VTIP. The Alpha and Beta of VGT are 10.41 points higher and 1.02 points higher than VTIP’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 2020 was the strongest year for VTIP, returning 4.97% on an annual basis. The poorest year for VTIP in the last ten years was 2013, with a yield of -1.55%. Most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 0.54% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 VTIP, the end total would have been $11,305. This equates to a $1,305 profit over 7 years and a compound annual growth rate (CAGR) of 1.79%.
VGT’s CAGR is 19.04 percentage points higher than that of VTIP and as a result, would have yielded $31,672 more on a $10,000 investment. Thus, VGT outperformed VTIP by 19.04% annually.
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