VOO vs. VCIT: What’s The Difference?

The Vanguard S&P 500 ETF (VOO) and the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) are both among the Top 100 ETFs. VOO is a Vanguard Large Blend fund and VCIT is a Vanguard Corporate Bond fund. So, what’s the difference between VOO and VCIT? And which fund is better?

The expense ratio of VOO is 0.02 percentage points lower than VCIT’s (0.03% vs. 0.05%). VOO also has a high exposure to the technology sector while VCIT is mostly comprised of BBB bonds. Overall, VOO has provided higher returns than VCIT over the past ten years.

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

Summary

VOO VCIT
Name Vanguard S&P 500 ETF Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares
Category Large Blend Corporate Bond
Issuer Vanguard Vanguard
AUM 753.41B 48.39B
Avg. Return 14.45% 5.84%
Div. Yield 1.34% 2.33%
Expense Ratio 0.03% 0.05%

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 Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) is a Corporate Bond fund that is issued by Vanguard. It currently has 48.39B total assets under management and has yielded an average annual return of 5.84% over the past 10 years. The fund has a dividend yield of 2.33% with an expense ratio of 0.05%.

VOO’s dividend yield is 0.99% lower than that of VCIT (1.34% vs. 2.33%). Also, VOO yielded on average 8.61% more per year over the past decade (14.45% vs. 5.84%). The expense ratio of VOO is 0.02 percentage points lower than VCIT’s (0.03% vs. 0.05%).

Fund Composition

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%.

VCIT - Holdings

VCIT Bond Sectors Weight
BBB 55.28%
A 37.85%
AA 5.22%
AAA 1.57%
Below B 0.08%
Others 0.0%
B 0.0%
BB 0.0%
US Government 0.0%

VCIT’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and Below B at 55.28%, 37.85%, 5.22%, 1.57%, and 0.08%. The fund is less weighted towards Others (0.0%), B (0.0%), and BB (0.0%) rated bonds.

Performance

Annual Returns

VOO vs. VCIT - Annual Returns

Year VOO VCIT
2020 18.35% 9.55%
2019 31.46% 13.97%
2018 -4.42% -1.75%
2017 21.78% 5.5%
2016 11.93% 5.3%
2015 1.35% 0.88%
2014 13.63% 7.47%
2013 32.33% -1.8%
2012 15.98% 11.36%
2011 2.09% 7.94%
2010 0.0% 10.65%

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 2019 was the strongest year for VCIT, returning 13.97% on an annual basis. The poorest year for VCIT in the last ten years was 2013, with a yield of -1.8%. Most years the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2011, when gains were 5.5%, 7.47%, and 7.94% respectively.

Portfolio Growth

VOO vs. VCIT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VOO $10,000 $36,575 14.45%
VCIT $10,000 $17,439 5.84%

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 VCIT, the end total would have been $17,439. This equates to a $7,439 profit over 10 years and a compound annual growth rate (CAGR) of 5.84%.

VOO’s CAGR is 8.61 percentage points higher than that of VCIT and as a result, would have yielded $19,136 more on a $10,000 investment. Thus, VOO outperformed VCIT by 8.61% annually.


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