The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the iShares Gold Trust (IAU) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and IAU is a iShares N/A fund. So, what’s the difference between VIG and IAU? And which fund is better?
The expense ratio of VIG is 0.19 percentage points lower than IAU’s (0.06% vs. 0.25%). VIG also has a higher exposure to the industrials sector and a lower standard deviation. Overall, VIG has provided higher returns than IAU over the past ten years.
In this article, we’ll compare VIG vs. IAU. We’ll look at risk metrics and holdings, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss VIG’s and IAU’s industry exposure, fund composition, and performance and examine how these affect their overall returns.
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Summary
| VIG | IAU | |
| Name | Vanguard Dividend Appreciation Index Fund ETF Shares | iShares Gold Trust |
| Category | Large Blend | N/A |
| Issuer | Vanguard | iShares |
| AUM | 71.92B | 28.61B |
| Avg. Return | 13.35% | 6.03% |
| Div. Yield | 1.56% | 0.0% |
| Expense Ratio | 0.06% | 0.25% |
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 Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.
VIG’s dividend yield is 1.56% higher than that of IAU (1.56% vs. 0.0%). Also, VIG yielded on average 7.31% more per year over the past decade (13.35% vs. 6.03%). The expense ratio of VIG is 0.19 percentage points lower than IAU’s (0.06% vs. 0.25%).
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Fund Composition
Industry Exposure
| VIG | IAU | |
| Technology | 14.93% | 0.0% |
| Industrials | 17.23% | 0.0% |
| Energy | 0.0% | 0.0% |
| Communication Services | 2.86% | 0.0% |
| Utilities | 2.81% | 0.0% |
| Healthcare | 15.52% | 0.0% |
| Consumer Defensive | 15.32% | 0.0% |
| Real Estate | 0.0% | 0.0% |
| Financial Services | 17.18% | 0.0% |
| Consumer Cyclical | 10.47% | 0.0% |
| Basic Materials | 3.67% | 0.0% |
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 Gold Trust (IAU) has the most exposure to the Technology sector at 0.0%. This is followed by Industrials and Energy at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.
IAU’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Energy stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
VIG is 17.23% more exposed to the Industrials sector than IAU (17.23% vs 0.0%). VIG’s exposure to Financial Services and Healthcare stocks is 17.18% higher and 15.52% higher respectively (17.18% vs. 0.0% and 15.52% vs. 0.0%). In total, Energy, Utilities, and Communication Services also make up 5.67% more of the fund’s holdings compared to IAU (5.67% vs. 0.00%).
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%.
| IAU Holdings | Weight |
| Gold | 100.0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.
N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.
Risk Analysis
| VIG | IAU | |
| Mean Return | 1.09 | 0.23 |
| R-squared | 92.2 | 16.03 |
| Std. Deviation | 12.25 | 16.97 |
| Alpha | 0.12 | 4.16 |
| Beta | 0.86 | 0.48 |
| Sharpe Ratio | 1.01 | 0.13 |
| Treynor Ratio | 14.33 | 1.5 |
The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Alpha of 0.12 with a Beta of 0.86 and a R-squared of 92.2. Its Treynor Ratio is 14.33 while VIG’s Standard Deviation is 12.25. Furthermore, the fund has a Mean Return of 1.09 and a Sharpe Ratio of 1.01.
The iShares Gold Trust (IAU) has a Alpha of 4.16 with a Beta of 0.48 and a Mean Return of 0.23. Its Sharpe Ratio is 0.13 while IAU’s Treynor Ratio is 1.5. Furthermore, the fund has a Standard Deviation of 16.97 and a R-squared of 16.03.
VIG’s Mean Return is 0.86 points higher than that of IAU and its R-squared is 76.17 points higher. With a Standard Deviation of 12.25, VIG is slightly less volatile than IAU. The Alpha and Beta of VIG are 4.04 points lower and 0.38 points higher than IAU’s Alpha and Beta.
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Performance
Annual Returns
| Year | VIG | IAU |
| 2020 | 15.46% | 23.86% |
| 2019 | 29.71% | 18.54% |
| 2018 | -2.02% | -1.39% |
| 2017 | 22.22% | 11.58% |
| 2016 | 11.84% | 8.85% |
| 2015 | -1.95% | -11.65% |
| 2014 | 10.06% | -0.44% |
| 2013 | 28.99% | -27.96% |
| 2012 | 11.61% | 8.37% |
| 2011 | 6.21% | 8.66% |
| 2010 | 14.67% | 27.93% |
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 2010 was the strongest year for IAU, returning 27.93% on an annual basis. The poorest year for IAU in the last ten years was 2013, with a yield of -27.96%. Most years the iShares Gold Trust has given investors modest returns, such as in 2012, 2011, and 2016, when gains were 8.37%, 8.66%, and 8.85% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VIG | $10,000 | $37,951 | 13.35% |
| IAU | $10,000 | $16,786 | 6.03% |
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 IAU, the end total would have been $16,786. This equates to a $6,786 profit over 11 years and a compound annual growth rate (CAGR) of 6.03%.
VIG’s CAGR is 7.31 percentage points higher than that of IAU and as a result, would have yielded $21,165 more on a $10,000 investment. Thus, VIG outperformed IAU by 7.31% annually.
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