The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and ACWI is a iShares N/A fund. So, what’s the difference between VO and ACWI? And which fund is better?
The expense ratio of VO is 0.28 percentage points lower than ACWI’s (0.04% vs. 0.32%). VO also has a higher exposure to the technology sector and a higher standard deviation. Overall, VO has provided higher returns than ACWI over the past ten years.
In this article, we’ll compare VO vs. ACWI. We’ll look at risk metrics and industry exposure, as well as at their holdings and portfolio growth. Moreover, I’ll also discuss VO’s and ACWI’s fund composition, annual returns, and performance and examine how these affect their overall returns.
|Name||Vanguard Mid-Cap Index Fund ETF Shares||iShares MSCI ACWI ETF|
The Vanguard Mid-Cap Index Fund ETF Shares (VO) is a Mid-Cap Blend fund that is issued by Vanguard. It currently has 154.08B total assets under management and has yielded an average annual return of 14.34% over the past 10 years. The fund has a dividend yield of 1.23% with an expense ratio of 0.04%.
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%.
VO’s dividend yield is 0.16% lower than that of ACWI (1.23% vs. 1.39%). Also, VO yielded on average 4.12% more per year over the past decade (14.34% vs. 10.21%). The expense ratio of VO is 0.28 percentage points lower than ACWI’s (0.04% vs. 0.32%).
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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has the most exposure to the Technology sector at 22.01%. This is followed by Healthcare and Consumer Cyclical at 13.03% and 12.12% respectively. Basic Materials (3.36%), Energy (3.82%), and Utilities (5.12%) only make up 12.30% of the fund’s total assets.
VO’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Industrials, and Consumer Cyclical stocks at 5.61%, 8.67%, 11.08%, 11.92%, and 12.12%.
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%.
VO is 1.60% more exposed to the Technology sector than ACWI (22.01% vs 20.41%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 1.29% higher and 0.11% higher respectively (13.03% vs. 11.74% and 12.12% vs. 12.01%). In total, Basic Materials, Energy, and Utilities also make up 1.48% more of the fund’s holdings compared to ACWI (12.30% vs. 10.82%).
|IDEXX Laboratories Inc||0.78%|
|Marvell Technology Inc||0.68%|
|IQVIA Holdings Inc||0.68%|
|Chipotle Mexican Grill Inc||0.63%|
|Veeva Systems Inc Class A||0.62%|
|Digital Realty Trust Inc||0.62%|
|Carrier Global Corp Ordinary Shares||0.61%|
VO’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Marvell Technology Inc, IQVIA Holdings Inc, and Chipotle Mexican Grill Inc at 0.78%, 0.75%, 0.68%, 0.68%, and 0.63%.
Veeva Systems Inc Class A (0.62%), Digital Realty Trust Inc (0.62%), and Centene Corp (0.62%) have a slightly smaller but still significant weight. Aptiv PLC and Carrier Global Corp Ordinary Shares are also represented in the VO’s holdings at 0.62% and 0.61%.
|Facebook Inc A||1.25%|
|Alphabet Inc Class C||1.12%|
|Alphabet Inc A||1.09%|
|Taiwan Semiconductor Manufacturing Co Ltd||0.79%|
|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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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Alpha of -2.71 with a Beta of 1.11 and a Standard Deviation of 15.65. Its Treynor Ratio is 11.32 while VO’s Mean Return is 1.14. Furthermore, the fund has a Sharpe Ratio of 0.83 and a R-squared of 92.22.
The iShares MSCI ACWI ETF (ACWI) has a Standard Deviation of 14.05 with a Mean Return of 0.89 and a Treynor Ratio of 9.45. Its R-squared is 99.96 while ACWI’s Alpha is 0.15. Furthermore, the fund has a Beta of 1 and a Sharpe Ratio of 0.71.
VO’s Mean Return is 0.25 points higher than that of ACWI and its R-squared is 7.74 points lower. With a Standard Deviation of 15.65, VO is slightly more volatile than ACWI. The Alpha and Beta of VO are 2.86 points lower and 0.11 points higher than ACWI’s Alpha and Beta.
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VO had its best year in 2013 with an annual return of 35.15%. VO’s worst year over the past decade yielded -9.21% and occurred in 2018. In most years the Vanguard Mid-Cap Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2020 where annual returns amounted to 13.76%, 15.98%, and 18.22% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VO would have resulted in a final balance of $40,404. This is a profit of $30,404 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.34%.
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%.
VO’s CAGR is 4.12 percentage points higher than that of ACWI and as a result, would have yielded $13,163 more on a $10,000 investment. Thus, VO outperformed ACWI by 4.12% annually.
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