The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the Vanguard FTSE Europe Index Fund ETF Shares (VGK) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and VGK is a Vanguard Europe Stock fund. So, what’s the difference between VO and VGK? And which fund is better?
The expense ratio of VO is 0.04 percentage points lower than VGK’s (0.04% vs. 0.08%). VO also has a higher exposure to the technology sector and a lower standard deviation. Overall, VO has provided higher returns than VGK over the past ten years.
In this article, we’ll compare VO vs. VGK. We’ll look at industry exposure and holdings, as well as at their fund composition and portfolio growth. Moreover, I’ll also discuss VO’s and VGK’s annual returns, performance, and risk metrics and examine how these affect their overall returns.
|Name||Vanguard Mid-Cap Index Fund ETF Shares||Vanguard FTSE Europe Index Fund ETF Shares|
|Category||Mid-Cap Blend||Europe Stock|
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 Vanguard FTSE Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% with an expense ratio of 0.08%.
VO’s dividend yield is 1.29% lower than that of VGK (1.23% vs. 2.52%). Also, VO yielded on average 7.66% more per year over the past decade (14.34% vs. 6.68%). The expense ratio of VO is 0.04 percentage points lower than VGK’s (0.04% vs. 0.08%).
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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 Vanguard FTSE Europe Index Fund ETF Shares (VGK) has the most exposure to the Financial Services sector at 15.85%. This is followed by Industrials and Healthcare at 15.58% and 13.76% respectively. Utilities (3.89%), Energy (4.3%), and Communication Services (5.09%) only make up 13.28% of the fund’s total assets.
VGK’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.67%, 8.3%, 11.39%, 11.6%, and 13.76%.
VO is 13.71% more exposed to the Technology sector than VGK (22.01% vs 8.3%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 0.73% lower and 0.52% higher respectively (13.03% vs. 13.76% and 12.12% vs. 11.6%). In total, Basic Materials, Energy, and Utilities also make up 3.56% less of the fund’s holdings compared to VGK (12.30% vs. 15.86%).
|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%.
|ASML Holding NV||2.2%|
|Roche Holding AG||2.13%|
|LVMH Moet Hennessy Louis Vuitton SE||1.58%|
|Novo Nordisk A/S B||1.09%|
VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.
AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.
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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Standard Deviation of 15.65 with a Treynor Ratio of 11.32 and a Alpha of -2.71. Its Beta is 1.11 while VO’s Sharpe Ratio is 0.83. Furthermore, the fund has a R-squared of 92.22 and a Mean Return of 1.14.
The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Standard Deviation of 16.65 with a Treynor Ratio of 5.12 and a Mean Return of 0.61. Its Beta is 1.06 while VGK’s Sharpe Ratio is 0.4. Furthermore, the fund has a R-squared of 92.76 and a Alpha of 0.45.
VO’s Mean Return is 0.53 points higher than that of VGK and its R-squared is 0.54 points lower. With a Standard Deviation of 15.65, VO is slightly less volatile than VGK. The Alpha and Beta of VO are 3.16 points lower and 0.05 points higher than VGK’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 2017 was the strongest year for VGK, returning 27.06% on an annual basis. The poorest year for VGK in the last ten years was 2018, with a yield of -14.79%. Most years the Vanguard FTSE Europe Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were -0.59%, 5.01%, and 6.5% 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 VGK, the end total would have been $18,350. This equates to a $8,350 profit over 11 years and a compound annual growth rate (CAGR) of 6.68%.
VO’s CAGR is 7.66 percentage points higher than that of VGK and as a result, would have yielded $22,054 more on a $10,000 investment. Thus, VO outperformed VGK by 7.66% annually.
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