VIG vs. ACWI: What’s The Difference?

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and ACWI is a iShares N/A fund. So, what’s the difference between VIG and ACWI? And which fund is better?

The expense ratio of VIG is 0.26 percentage points lower than ACWI’s (0.06% vs. 0.32%). VIG also has a higher exposure to the industrials sector and a lower standard deviation. Overall, VIG has provided higher returns than ACWI over the past ten years.

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

Summary

VIG ACWI
Name Vanguard Dividend Appreciation Index Fund ETF Shares iShares MSCI ACWI ETF
Category Large Blend N/A
Issuer Vanguard iShares
AUM 71.92B 16.85B
Avg. Return 13.35% 10.21%
Div. Yield 1.56% 1.39%
Expense Ratio 0.06% 0.32%

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) is a Large Blend fund that is issued by Vanguard. It currently has 71.92B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.56% with an expense ratio of 0.06%.

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

VIG’s dividend yield is 0.17% higher than that of ACWI (1.56% vs. 1.39%). Also, VIG yielded on average 3.13% more per year over the past decade (13.35% vs. 10.21%). The expense ratio of VIG is 0.26 percentage points lower than ACWI’s (0.06% vs. 0.32%).

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Fund Composition

Industry Exposure

VIG vs. ACWI - Industry Exposure

VIG ACWI
Technology 14.93% 20.41%
Industrials 17.23% 9.65%
Energy 0.0% 3.48%
Communication Services 2.86% 9.87%
Utilities 2.81% 2.61%
Healthcare 15.52% 11.74%
Consumer Defensive 15.32% 7.15%
Real Estate 0.0% 2.75%
Financial Services 17.18% 15.58%
Consumer Cyclical 10.47% 12.01%
Basic Materials 3.67% 4.73%

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has the most exposure to the Industrials sector at 17.23%. This is followed by Financial Services and Healthcare at 17.18% and 15.52% respectively. Energy (0.0%), Utilities (2.81%), and Communication Services (2.86%) only make up 5.67% of the fund’s total assets.

VIG’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Cyclical, Technology, Consumer Defensive, and Healthcare stocks at 3.67%, 10.47%, 14.93%, 15.32%, and 15.52%.

The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.

ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.

VIG is 7.58% more exposed to the Industrials sector than ACWI (17.23% vs 9.65%). VIG’s exposure to Financial Services and Healthcare stocks is 1.60% higher and 3.78% higher respectively (17.18% vs. 15.58% and 15.52% vs. 11.74%). In total, Energy, Utilities, and Communication Services also make up 10.29% less of the fund’s holdings compared to ACWI (5.67% vs. 15.96%).

Holdings

VIG - Holdings

VIG Holdings Weight
Microsoft Corp 4.19%
JPMorgan Chase & Co 3.8%
Johnson & Johnson 3.67%
Walmart Inc 3.38%
Visa Inc Class A 3.22%
UnitedHealth Group Inc 3.22%
The Home Depot Inc 2.91%
Procter & Gamble Co 2.82%
Comcast Corp Class A 2.21%
Coca-Cola Co 1.98%

VIG’s Top Holdings are Microsoft Corp, JPMorgan Chase & Co, Johnson & Johnson, Walmart Inc, and Visa Inc Class A at 4.19%, 3.8%, 3.67%, 3.38%, and 3.22%.

UnitedHealth Group Inc (3.22%), The Home Depot Inc (2.91%), and Procter & Gamble Co (2.82%) have a slightly smaller but still significant weight. Comcast Corp Class A and Coca-Cola Co are also represented in the VIG’s holdings at 2.21% and 1.98%.

ACWI - Holdings

ACWI Holdings Weight
Apple Inc 3.44%
Microsoft Corp 2.91%
Amazon.com Inc 2.21%
Facebook Inc A 1.25%
Alphabet Inc Class C 1.12%
Alphabet Inc A 1.09%
Taiwan Semiconductor Manufacturing Co Ltd 0.79%
Tesla Inc 0.78%
NVIDIA Corp 0.74%
JPMorgan Chase & Co 0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

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Risk Analysis

VIG ACWI
Mean Return 1.09 0.89
R-squared 92.2 99.96
Std. Deviation 12.25 14.05
Alpha 0.12 0.15
Beta 0.86 1
Sharpe Ratio 1.01 0.71
Treynor Ratio 14.33 9.45

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Mean Return of 1.09 with a Treynor Ratio of 14.33 and a Sharpe Ratio of 1.01. Its Alpha is 0.12 while VIG’s R-squared is 92.2. Furthermore, the fund has a Beta of 0.86 and a Standard Deviation of 12.25.

The iShares MSCI ACWI ETF (ACWI) has a Treynor Ratio of 9.45 with a Standard Deviation of 14.05 and a Beta of 1. Its Sharpe Ratio is 0.71 while ACWI’s Alpha is 0.15. Furthermore, the fund has a Mean Return of 0.89 and a R-squared of 99.96.

VIG’s Mean Return is 0.20 points higher than that of ACWI and its R-squared is 7.76 points lower. With a Standard Deviation of 12.25, VIG is slightly less volatile than ACWI. The Alpha and Beta of VIG are 0.03 points lower and 0.14 points lower than ACWI’s Alpha and Beta.

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Performance

Annual Returns

VIG vs. ACWI - Annual Returns

Year VIG ACWI
2020 15.46% 16.38%
2019 29.71% 26.7%
2018 -2.02% -9.15%
2017 22.22% 24.35%
2016 11.84% 8.22%
2015 -1.95% -2.39%
2014 10.06% 4.64%
2013 28.99% 22.91%
2012 11.61% 15.99%
2011 6.21% -7.6%
2010 14.67% 12.31%

VIG had its best year in 2019 with an annual return of 29.71%. VIG’s worst year over the past decade yielded -2.02% and occurred in 2018. In most years the Vanguard Dividend Appreciation Index Fund ETF Shares provided moderate returns such as in 2012, 2016, and 2010 where annual returns amounted to 11.61%, 11.84%, and 14.67% respectively.

The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.

Portfolio Growth

VIG vs. ACWI - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VIG $10,000 $37,951 13.35%
ACWI $10,000 $27,241 10.21%

A $10,000 investment in VIG would have resulted in a final balance of $37,951. This is a profit of $27,951 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.35%.

With a $10,000 investment in ACWI, the end total would have been $27,241. This equates to a $17,241 profit over 11 years and a compound annual growth rate (CAGR) of 10.21%.

VIG’s CAGR is 3.13 percentage points higher than that of ACWI and as a result, would have yielded $10,710 more on a $10,000 investment. Thus, VIG outperformed ACWI by 3.13% annually.


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