The Vanguard Total World Stock Index Fund ETF Shares (VT) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. VT is a Vanguard N/A fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between VT and GOVT? And which fund is better?
The expense ratio of VT is 0.03 percentage points higher than GOVT’s (0.08% vs. 0.05%). VT also has a high exposure to the technology sector while GOVT is mostly comprised of AAA bonds. Overall, VT has provided higher returns than GOVT over the past 8 years.
In this article, we’ll compare VT vs. GOVT. We’ll look at industry exposure and risk metrics, as well as at their fund composition and holdings. Moreover, I’ll also discuss VT’s and GOVT’s portfolio growth, annual returns, and performance and examine how these affect their overall returns.
Summary
| VT | GOVT | |
| Name | Vanguard Total World Stock Index Fund ETF Shares | iShares U.S. Treasury Bond ETF |
| Category | N/A | Intermediate Government |
| Issuer | Vanguard | iShares |
| AUM | 30.44B | 17.07B |
| Avg. Return | 10.42% | 2.67% |
| Div. Yield | 1.65% | 1.0% |
| Expense Ratio | 0.08% | 0.05% |
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%.
The iShares U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.
VT’s dividend yield is 0.65% higher than that of GOVT (1.65% vs. 1.0%). Also, VT yielded on average 7.74% more per year over the past decade (10.42% vs. 2.67%). The expense ratio of VT is 0.03 percentage points higher than GOVT’s (0.08% vs. 0.05%).
Fund Composition
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%.
| GOVT 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% |
GOVT’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.
Risk Analysis
| VT | GOVT | |
| Mean Return | 0.9 | 0 |
| R-squared | 99.35 | 0 |
| Std. Deviation | 14.19 | 0 |
| Alpha | 0.2 | 0 |
| Beta | 1.01 | 0 |
| Sharpe Ratio | 0.71 | 0 |
| Treynor Ratio | 9.5 | 0 |
The Vanguard Total World Stock Index Fund ETF Shares (VT) has a R-squared of 99.35 with a Standard Deviation of 14.19 and a Mean Return of 0.9. Its Treynor Ratio is 9.5 while VT’s Alpha is 0.2. Furthermore, the fund has a Sharpe Ratio of 0.71 and a Beta of 1.01.
The iShares U.S. Treasury Bond ETF (GOVT) has a R-squared of 0 with a Alpha of 0 and a Standard Deviation of 0. Its Mean Return is 0 while GOVT’s Beta is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Treynor Ratio of 0.
VT’s Mean Return is 0.90 points higher than that of GOVT and its R-squared is 99.35 points higher. With a Standard Deviation of 14.19, VT is slightly more volatile than GOVT. The Alpha and Beta of VT are 0.20 points higher and 1.01 points higher than GOVT’s Alpha and Beta.
Performance
Annual Returns
| Year | VT | GOVT |
| 2020 | 16.74% | 7.92% |
| 2019 | 26.8% | 6.71% |
| 2018 | -9.67% | 0.74% |
| 2017 | 24.19% | 2.19% |
| 2016 | 8.77% | 0.92% |
| 2015 | -1.88% | 0.76% |
| 2014 | 3.97% | 4.99% |
| 2013 | 22.98% | -2.84% |
| 2012 | 17.33% | 0.0% |
| 2011 | -7.71% | 0.0% |
| 2010 | 13.05% | 0.0% |
VT had its best year in 2019 with an annual return of 26.8%. VT’s worst year over the past decade yielded -9.67% and occurred in 2018. In most years the Vanguard Total World Stock Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 8.77%, 13.05%, and 16.74% respectively.
The year 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VT | $10,000 | $22,660 | 10.42% |
| GOVT | $10,000 | $12,297 | 2.67% |
A $10,000 investment in VT would have resulted in a final balance of $22,660. This is a profit of $12,660 over 8 years and amounts to a compound annual growth rate (CAGR) of 10.42%.
With a $10,000 investment in GOVT, the end total would have been $12,297. This equates to a $2,297 profit over 8 years and a compound annual growth rate (CAGR) of 2.67%.
VT’s CAGR is 7.74 percentage points higher than that of GOVT and as a result, would have yielded $10,363 more on a $10,000 investment. Thus, VT outperformed GOVT by 7.74% annually.
Current recommendations:
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
