The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the iShares Gold Trust (IAU) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and IAU is a iShares N/A fund. So, what’s the difference between VO and IAU? And which fund is better?
The expense ratio of VO is 0.21 percentage points lower than IAU’s (0.04% vs. 0.25%). VO also has a higher exposure to the technology sector and a lower standard deviation. Overall, VO has provided higher returns than IAU over the past ten years.
In this article, we’ll compare VO vs. IAU. We’ll look at fund composition and industry exposure, as well as at their annual returns and risk metrics. Moreover, I’ll also discuss VO’s and IAU’s performance, holdings, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Mid-Cap Index Fund ETF Shares||iShares Gold Trust|
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 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%.
VO’s dividend yield is 1.23% higher than that of IAU (1.23% vs. 0.0%). Also, VO yielded on average 8.30% more per year over the past decade (14.34% vs. 6.03%). The expense ratio of VO is 0.21 percentage points lower than IAU’s (0.04% vs. 0.25%).
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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 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%.
VO is 22.01% more exposed to the Technology sector than IAU (22.01% vs 0.0%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 13.03% higher and 12.12% higher respectively (13.03% vs. 0.0% and 12.12% vs. 0.0%). In total, Basic Materials, Energy, and Utilities also make up 12.30% more of the fund’s holdings compared to IAU (12.30% vs. 0.00%).
|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%.
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%.
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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Treynor Ratio of 11.32 with a Standard Deviation of 15.65 and a R-squared of 92.22. Its Alpha is -2.71 while VO’s Beta is 1.11. Furthermore, the fund has a Sharpe Ratio of 0.83 and a Mean Return of 1.14.
The iShares Gold Trust (IAU) has a Mean Return of 0.23 with a Treynor Ratio of 1.5 and a Standard Deviation of 16.97. Its Sharpe Ratio is 0.13 while IAU’s Beta is 0.48. Furthermore, the fund has a Alpha of 4.16 and a R-squared of 16.03.
VO’s Mean Return is 0.91 points higher than that of IAU and its R-squared is 76.19 points higher. With a Standard Deviation of 15.65, VO is slightly less volatile than IAU. The Alpha and Beta of VO are 6.87 points lower and 0.63 points higher than IAU’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 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.
|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 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%.
VO’s CAGR is 8.30 percentage points higher than that of IAU and as a result, would have yielded $23,618 more on a $10,000 investment. Thus, VO outperformed IAU by 8.30% annually.
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