VOO vs. IAU: What’s The Difference?

The Vanguard S&P 500 ETF (VOO) and the iShares Gold Trust (IAU) are both among the Top 100 ETFs. VOO is a Vanguard Large Blend fund and IAU is a iShares N/A fund. So, what’s the difference between VOO and IAU? And which fund is better?

The expense ratio of VOO is 0.22 percentage points lower than IAU’s (0.03% vs. 0.25%). VOO also has a higher exposure to the technology sector and a lower standard deviation. Overall, VOO has provided higher returns than IAU over the past ten years.

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

Summary

VOO IAU
Name Vanguard S&P 500 ETF iShares Gold Trust
Category Large Blend N/A
Issuer Vanguard iShares
AUM 753.41B 28.61B
Avg. Return 14.45% 6.03%
Div. Yield 1.34% 0.0%
Expense Ratio 0.03% 0.25%

The Vanguard S&P 500 ETF (VOO) is a Large Blend fund that is issued by Vanguard. It currently has 753.41B total assets under management and has yielded an average annual return of 14.45% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.03%.

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%.

VOO’s dividend yield is 1.34% higher than that of IAU (1.34% vs. 0.0%). Also, VOO yielded on average 8.42% more per year over the past decade (14.45% vs. 6.03%). The expense ratio of VOO is 0.22 percentage points lower than IAU’s (0.03% vs. 0.25%).

Fund Composition

Industry Exposure

VOO vs. IAU - Industry Exposure

VOO IAU
Technology 24.24% 0.0%
Industrials 8.86% 0.0%
Energy 2.84% 0.0%
Communication Services 11.14% 0.0%
Utilities 2.43% 0.0%
Healthcare 13.1% 0.0%
Consumer Defensive 6.32% 0.0%
Real Estate 2.58% 0.0%
Financial Services 14.2% 0.0%
Consumer Cyclical 12.01% 0.0%
Basic Materials 2.27% 0.0%

The Vanguard S&P 500 ETF (VOO) has the most exposure to the Technology sector at 24.24%. This is followed by Financial Services and Healthcare at 14.2% and 13.1% respectively. Utilities (2.43%), Real Estate (2.58%), and Energy (2.84%) only make up 7.85% of the fund’s total assets.

VOO’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 6.32%, 8.86%, 11.14%, 12.01%, and 13.1%.

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%.

VOO is 24.24% more exposed to the Technology sector than IAU (24.24% vs 0.0%). VOO’s exposure to Financial Services and Healthcare stocks is 14.20% higher and 13.10% higher respectively (14.2% vs. 0.0% and 13.1% vs. 0.0%). In total, Utilities, Real Estate, and Energy also make up 7.85% more of the fund’s holdings compared to IAU (7.85% vs. 0.00%).

Holdings

VOO - Holdings

VOO Holdings Weight
Apple Inc 5.92%
Microsoft Corp 5.62%
Amazon.com Inc 4.06%
Facebook Inc Class A 2.29%
Alphabet Inc Class A 2.02%
Alphabet Inc Class C 1.97%
Tesla Inc 1.44%
Berkshire Hathaway Inc Class B 1.44%
NVIDIA Corp 1.37%
JPMorgan Chase & Co 1.3%

VOO’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.92%, 5.62%, 4.06%, 2.29%, and 2.02%.

Alphabet Inc Class C (1.97%), Tesla Inc (1.44%), and Berkshire Hathaway Inc Class B (1.44%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VOO’s holdings at 1.37% and 1.3%.

IAU - Holdings

IAU Holdings Weight
Gold 100.0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%

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%.

Performance

Annual Returns

VOO vs. IAU - Annual Returns

Year VOO IAU
2020 18.35% 23.86%
2019 31.46% 18.54%
2018 -4.42% -1.39%
2017 21.78% 11.58%
2016 11.93% 8.85%
2015 1.35% -11.65%
2014 13.63% -0.44%
2013 32.33% -27.96%
2012 15.98% 8.37%
2011 2.09% 8.66%
2010 0.0% 27.93%

VOO had its best year in 2013 with an annual return of 32.33%. VOO’s worst year over the past decade yielded -4.42% and occurred in 2018. In most years the Vanguard S&P 500 ETF provided moderate returns such as in 2016, 2014, and 2012 where annual returns amounted to 11.93%, 13.63%, and 15.98% 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.

Portfolio Growth

VOO vs. IAU - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VOO $10,000 $36,575 14.45%
IAU $10,000 $13,121 6.03%

A $10,000 investment in VOO would have resulted in a final balance of $36,575. This is a profit of $26,575 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.45%.

With a $10,000 investment in IAU, the end total would have been $13,121. This equates to a $3,121 profit over 10 years and a compound annual growth rate (CAGR) of 6.03%.

VOO’s CAGR is 8.42 percentage points higher than that of IAU and as a result, would have yielded $23,454 more on a $10,000 investment. Thus, VOO outperformed IAU by 8.42% annually.


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