The Vanguard S&P 500 ETF (VOO) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. VOO is a Vanguard Large Blend fund and TLT is a iShares Long Government fund. So, what’s the difference between VOO and TLT? And which fund is better?
The expense ratio of VOO is 0.12 percentage points lower than TLT’s (0.03% vs. 0.15%). VOO also has a high exposure to the technology sector while TLT is mostly comprised of AAA bonds. Overall, VOO has provided higher returns than TLT over the past ten years.
In this article, we’ll compare VOO vs. TLT. We’ll look at annual returns and risk metrics, as well as at their holdings and portfolio growth. Moreover, I’ll also discuss VOO’s and TLT’s industry exposure, fund composition, and performance and examine how these affect their overall returns.
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Summary
| VOO | TLT | |
| Name | Vanguard S&P 500 ETF | iShares 20+ Year Treasury Bond ETF |
| Category | Large Blend | Long Government |
| Issuer | Vanguard | iShares |
| AUM | 753.41B | 15.15B |
| Avg. Return | 14.45% | 9.00% |
| Div. Yield | 1.34% | 1.5% |
| Expense Ratio | 0.03% | 0.15% |
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 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.
VOO’s dividend yield is 0.16% lower than that of TLT (1.34% vs. 1.5%). Also, VOO yielded on average 5.45% more per year over the past decade (14.45% vs. 9.00%). The expense ratio of VOO is 0.12 percentage points lower than TLT’s (0.03% vs. 0.15%).
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Fund Composition
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%.
| TLT Bond Sectors | Weight |
| AAA | 100.0% |
| Others | 0.0% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
TLT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
Performance
Annual Returns
| Year | VOO | TLT |
| 2020 | 18.35% | 17.92% |
| 2019 | 31.46% | 14.93% |
| 2018 | -4.42% | -2.07% |
| 2017 | 21.78% | 8.92% |
| 2016 | 11.93% | 1.36% |
| 2015 | 1.35% | -1.65% |
| 2014 | 13.63% | 27.35% |
| 2013 | 32.33% | -13.91% |
| 2012 | 15.98% | 3.25% |
| 2011 | 2.09% | 33.6% |
| 2010 | 0.0% | 9.25% |
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 2011 was the strongest year for TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VOO | $10,000 | $36,575 | 14.45% |
| TLT | $10,000 | $21,793 | 9.00% |
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 TLT, the end total would have been $21,793. This equates to a $11,793 profit over 10 years and a compound annual growth rate (CAGR) of 9.00%.
VOO’s CAGR is 5.45 percentage points higher than that of TLT and as a result, would have yielded $14,782 more on a $10,000 investment. Thus, VOO outperformed TLT by 5.45% annually.
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