The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the Vanguard Information Technology Index Fund ETF Shares (VGT) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and VGT is a Vanguard Technology fund. So, what’s the difference between VO and VGT? And which fund is better?
The expense ratio of VO is 0.06 percentage points lower than VGT’s (0.04% vs. 0.1%). VO also has a lower exposure to the technology sector and a lower standard deviation. Overall, VO has provided lower returns than VGT over the past ten years.
In this article, we’ll compare VO vs. VGT. We’ll look at annual returns and fund composition, as well as at their industry exposure and performance. Moreover, I’ll also discuss VO’s and VGT’s risk metrics, holdings, and portfolio growth and examine how these affect their overall returns.
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|Name||Vanguard Mid-Cap Index Fund ETF Shares||Vanguard Information Technology Index Fund ETF Shares|
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 Information Technology Index Fund ETF Shares (VGT) is a Technology fund that is issued by Vanguard. It currently has 54.13B total assets under management and has yielded an average annual return of 20.84% over the past 10 years. The fund has a dividend yield of 0.66% with an expense ratio of 0.1%.
VO’s dividend yield is 0.57% higher than that of VGT (1.23% vs. 0.66%). Also, VO yielded on average 6.50% less per year over the past decade (14.34% vs. 20.84%). The expense ratio of VO is 0.06 percentage points lower than VGT’s (0.04% vs. 0.1%).
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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 Information Technology Index Fund ETF Shares (VGT) has the most exposure to the Technology sector at 88.89%. This is followed by Financial Services and Industrials at 8.83% and 1.67% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
VGT’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Energy, Communication Services, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.61%, and 1.67%.
VO is 66.88% less exposed to the Technology sector than VGT (22.01% vs 88.89%). 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 VGT (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%.
|Visa Inc Class A||3.16%|
|PayPal Holdings Inc||2.76%|
|Mastercard Inc Class A||2.76%|
|Cisco Systems Inc||1.9%|
VGT’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 19.58%, 16.53%, 4.22%, 3.16%, and 2.76%.
Mastercard Inc Class A (2.76%), Adobe Inc (2.39%), and Intel Corp (1.94%) have a slightly smaller but still significant weight. Salesforce.com Inc and Cisco Systems Inc are also represented in the VGT’s holdings at 1.91% and 1.9%.
The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Alpha of -2.71 with a Sharpe Ratio of 0.83 and a Standard Deviation of 15.65. Its Beta is 1.11 while VO’s Mean Return is 1.14. Furthermore, the fund has a Treynor Ratio of 11.32 and a R-squared of 92.22.
The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Mean Return of 1.76 with a Beta of 1.02 and a Sharpe Ratio of 1.23. Its Standard Deviation is 16.61 while VGT’s Alpha is 10.41. Furthermore, the fund has a R-squared of 74.84 and a Treynor Ratio of 20.55.
VO’s Mean Return is 0.62 points lower than that of VGT and its R-squared is 17.38 points higher. With a Standard Deviation of 15.65, VO is slightly less volatile than VGT. The Alpha and Beta of VO are 13.12 points lower and 0.09 points higher than VGT’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 VGT, returning 48.68% on an annual basis. The poorest year for VGT in the last ten years was 2011, with a yield of 0.52%. Most years the Vanguard Information Technology Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2014, when gains were 13.73%, 14.05%, and 18.01% 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 VGT, the end total would have been $72,718. This equates to a $62,718 profit over 11 years and a compound annual growth rate (CAGR) of 20.84%.
VO’s CAGR is 6.50 percentage points lower than that of VGT and as a result, would have yielded $32,314 less on a $10,000 investment. Thus, VO performed worse than VGT by 6.50% annually.
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