VO vs. VT: What’s The Difference?

The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the Vanguard Total World Stock Index Fund ETF Shares (VT) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and VT is a Vanguard N/A fund. So, what’s the difference between VO and VT? And which fund is better?

The expense ratio of VO is 0.04 percentage points lower than VT’s (0.04% vs. 0.08%). VO also has a higher exposure to the technology sector and a higher standard deviation. Overall, VO has provided higher returns than VT over the past ten years.

In this article, we’ll compare VO vs. VT. We’ll look at holdings and risk metrics, as well as at their portfolio growth and fund composition. Moreover, I’ll also discuss VO’s and VT’s performance, industry exposure, and annual returns and examine how these affect their overall returns.

Summary

VO VT
Name Vanguard Mid-Cap Index Fund ETF Shares Vanguard Total World Stock Index Fund ETF Shares
Category Mid-Cap Blend N/A
Issuer Vanguard Vanguard
AUM 154.08B 30.44B
Avg. Return 14.34% 10.42%
Div. Yield 1.23% 1.65%
Expense Ratio 0.04% 0.08%

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 Total World Stock Index Fund ETF Shares (VT) is a N/A fund that is issued by Vanguard. It currently has 30.44B total assets under management and has yielded an average annual return of 10.42% over the past 10 years. The fund has a dividend yield of 1.65% with an expense ratio of 0.08%.

VO’s dividend yield is 0.42% lower than that of VT (1.23% vs. 1.65%). Also, VO yielded on average 3.92% more per year over the past decade (14.34% vs. 10.42%). The expense ratio of VO is 0.04 percentage points lower than VT’s (0.04% vs. 0.08%).

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Fund Composition

Industry Exposure

VO vs. VT - Industry Exposure

VO VT
Technology 22.01% 19.63%
Industrials 11.92% 10.7%
Energy 3.82% 3.48%
Communication Services 5.61% 9.02%
Utilities 5.12% 2.6%
Healthcare 13.03% 11.58%
Consumer Defensive 3.25% 6.71%
Real Estate 8.67% 3.64%
Financial Services 11.08% 15.36%
Consumer Cyclical 12.12% 12.32%
Basic Materials 3.36% 4.97%

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 Total World Stock Index Fund ETF Shares (VT) has the most exposure to the Technology sector at 19.63%. This is followed by Financial Services and Consumer Cyclical at 15.36% and 12.32% respectively. Energy (3.48%), Real Estate (3.64%), and Basic Materials (4.97%) only make up 12.09% of the fund’s total assets.

VT’s mid-section with moderate exposure is comprised of Consumer Defensive, Communication Services, Industrials, Healthcare, and Consumer Cyclical stocks at 6.71%, 9.02%, 10.7%, 11.58%, and 12.32%.

VO is 2.38% more exposed to the Technology sector than VT (22.01% vs 19.63%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 1.45% higher and 0.20% lower respectively (13.03% vs. 11.58% and 12.12% vs. 12.32%). In total, Basic Materials, Energy, and Utilities also make up 1.25% more of the fund’s holdings compared to VT (12.30% vs. 11.05%).

Holdings

VO - Holdings

VO Holdings Weight
IDEXX Laboratories Inc 0.78%
DocuSign Inc 0.75%
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%
Centene Corp 0.62%
Aptiv PLC 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%.

VT - Holdings

VT Holdings Weight
Apple Inc 2.85%
Microsoft Corp 2.71%
Amazon.com Inc 1.98%
Facebook Inc Class A 1.1%
Alphabet Inc Class A 0.97%
Alphabet Inc Class C 0.95%
Tesla Inc 0.7%
NVIDIA Corp 0.64%
JPMorgan Chase & Co 0.62%
Tencent Holdings Ltd 0.6%

VT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 2.85%, 2.71%, 1.98%, 1.1%, and 0.97%.

Alphabet Inc Class C (0.95%), Tesla Inc (0.7%), and NVIDIA Corp (0.64%) have a slightly smaller but still significant weight. JPMorgan Chase & Co and Tencent Holdings Ltd are also represented in the VT’s holdings at 0.62% and 0.6%.

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Risk Analysis

VO VT
Mean Return 1.14 0.9
R-squared 92.22 99.35
Std. Deviation 15.65 14.19
Alpha -2.71 0.2
Beta 1.11 1.01
Sharpe Ratio 0.83 0.71
Treynor Ratio 11.32 9.5

The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Mean Return of 1.14 with a Alpha of -2.71 and a Beta of 1.11. Its Treynor Ratio is 11.32 while VO’s Sharpe Ratio is 0.83. Furthermore, the fund has a Standard Deviation of 15.65 and a R-squared of 92.22.

The Vanguard Total World Stock Index Fund ETF Shares (VT) has a Beta of 1.01 with a R-squared of 99.35 and a Standard Deviation of 14.19. Its Treynor Ratio is 9.5 while VT’s Sharpe Ratio is 0.71. Furthermore, the fund has a Alpha of 0.2 and a Mean Return of 0.9.

VO’s Mean Return is 0.24 points higher than that of VT and its R-squared is 7.13 points lower. With a Standard Deviation of 15.65, VO is slightly more volatile than VT. The Alpha and Beta of VO are 2.91 points lower and 0.10 points higher than VT’s Alpha and Beta.

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Performance

Annual Returns

VO vs. VT - Annual Returns

Year VO VT
2020 18.22% 16.74%
2019 31.04% 26.8%
2018 -9.21% -9.67%
2017 19.25% 24.19%
2016 11.23% 8.77%
2015 -1.34% -1.88%
2014 13.76% 3.97%
2013 35.15% 22.98%
2012 15.98% 17.33%
2011 -1.96% -7.71%
2010 25.57% 13.05%

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 VT, returning 26.8% on an annual basis. The poorest year for VT in the last ten years was 2018, with a yield of -9.67%. Most years the Vanguard Total World Stock Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 8.77%, 13.05%, and 16.74% respectively.

Portfolio Growth

VO vs. VT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VO $10,000 $40,404 14.34%
VT $10,000 $27,739 10.42%

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 VT, the end total would have been $27,739. This equates to a $17,739 profit over 11 years and a compound annual growth rate (CAGR) of 10.42%.

VO’s CAGR is 3.92 percentage points higher than that of VT and as a result, would have yielded $12,665 more on a $10,000 investment. Thus, VO outperformed VT by 3.92% annually.


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