The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the Vanguard Health Care Index Fund ETF Shares (VHT) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and VHT is a Vanguard Health fund. So, what’s the difference between VO and VHT? And which fund is better?
The expense ratio of VO is 0.06 percentage points lower than VHT’s (0.04% vs. 0.1%). VO also has a higher exposure to the technology sector and a higher standard deviation. Overall, VO has provided lower returns than VHT over the past ten years.
In this article, we’ll compare VO vs. VHT. We’ll look at holdings and portfolio growth, as well as at their risk metrics and fund composition. Moreover, I’ll also discuss VO’s and VHT’s performance, annual returns, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Mid-Cap Index Fund ETF Shares||Vanguard Health Care 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 Health Care Index Fund ETF Shares (VHT) is a Health fund that is issued by Vanguard. It currently has 17.94B total assets under management and has yielded an average annual return of 16.04% over the past 10 years. The fund has a dividend yield of 1.15% with an expense ratio of 0.1%.
VO’s dividend yield is 0.08% higher than that of VHT (1.23% vs. 1.15%). Also, VO yielded on average 1.70% less per year over the past decade (14.34% vs. 16.04%). The expense ratio of VO is 0.06 percentage points lower than VHT’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 Health Care Index Fund ETF Shares (VHT) has the most exposure to the Healthcare sector at 99.57%. This is followed by Basic Materials and Technology at 0.31% and 0.05% respectively. Real Estate (0.0%), Consumer Defensive (0.0%), and Utilities (0.0%) only make up 0.00% of the fund’s total assets.
VHT’s mid-section with moderate exposure is comprised of Communication Services, Energy, Financial Services, Industrials, and Technology stocks at 0.0%, 0.0%, 0.02%, 0.05%, and 0.05%.
VO is 21.96% more exposed to the Technology sector than VHT (22.01% vs 0.05%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 86.54% lower and 12.12% higher respectively (13.03% vs. 99.57% and 12.12% vs. 0.0%). In total, Basic Materials, Energy, and Utilities also make up 11.99% more of the fund’s holdings compared to VHT (12.30% vs. 0.31%).
|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%.
|Johnson & Johnson||7.34%|
|UnitedHealth Group Inc||6.44%|
|Thermo Fisher Scientific Inc||3.37%|
|Merck & Co Inc||3.33%|
|Eli Lilly and Co||3.17%|
VHT’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and Thermo Fisher Scientific Inc at 7.34%, 6.44%, 3.7%, 3.48%, and 3.37%.
AbbVie Inc (3.37%), Merck & Co Inc (3.33%), and Eli Lilly and Co (3.17%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the VHT’s holdings at 2.91% and 2.83%.
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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Mean Return of 1.14 with a Standard Deviation of 15.65 and a Sharpe Ratio of 0.83. Its Alpha is -2.71 while VO’s Treynor Ratio is 11.32. Furthermore, the fund has a R-squared of 92.22 and a Beta of 1.11.
The Vanguard Health Care Index Fund ETF Shares (VHT) has a Mean Return of 1.33 with a Beta of 0.75 and a Treynor Ratio of 20.74. Its Standard Deviation is 13.58 while VHT’s R-squared is 59.86. Furthermore, the fund has a Sharpe Ratio of 1.13 and a Alpha of 7.99.
VO’s Mean Return is 0.19 points lower than that of VHT and its R-squared is 32.36 points higher. With a Standard Deviation of 15.65, VO is slightly more volatile than VHT. The Alpha and Beta of VO are 10.70 points lower and 0.36 points higher than VHT’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 2013 was the strongest year for VHT, returning 42.67% on an annual basis. The poorest year for VHT in the last ten years was 2016, with a yield of -3.33%. Most years the Vanguard Health Care Index Fund ETF Shares has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 10.57%, 18.21%, and 19.1% 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 VHT, the end total would have been $48,464. This equates to a $38,464 profit over 11 years and a compound annual growth rate (CAGR) of 16.04%.
VO’s CAGR is 1.70 percentage points lower than that of VHT and as a result, would have yielded $8,060 less on a $10,000 investment. Thus, VO performed worse than VHT by 1.70% annually.
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