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VT vs. IEF: What’s The Difference?

The Vanguard Total World Stock Index Fund ETF Shares (VT) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. VT is a Vanguard N/A fund and IEF is a iShares Long Government fund. So, what’s the difference between VT and IEF? And which fund is better?

The expense ratio of VT is 0.07 percentage points lower than IEF’s (0.08% vs. 0.15%). VT also has a high exposure to the technology sector while IEF is mostly comprised of AAA bonds. Overall, VT has provided higher returns than IEF over the past 11 years.

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

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Summary

VTIEF
NameVanguard Total World Stock Index Fund ETF SharesiShares 7-10 Year Treasury Bond ETF
CategoryN/ALong Government
IssuerVanguardiShares
AUM30.44B13.44B
Avg. Return10.42%5.06%
Div. Yield1.65%0.84%
Expense Ratio0.08%0.15%

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 7-10 Year Treasury Bond ETF (IEF) is a Long Government fund that is issued by iShares. It currently has 13.44B total assets under management and has yielded an average annual return of 5.06% over the past 10 years. The fund has a dividend yield of 0.84% with an expense ratio of 0.15%.

VT’s dividend yield is 0.81% higher than that of IEF (1.65% vs. 0.84%). Also, VT yielded on average 5.35% more per year over the past decade (10.42% vs. 5.06%). The expense ratio of VT is 0.07 percentage points lower than IEF’s (0.08% vs. 0.15%).

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Fund Composition

Holdings

VT - Holdings

VT HoldingsWeight
Apple Inc2.85%
Microsoft Corp2.71%
Amazon.com Inc1.98%
Facebook Inc Class A1.1%
Alphabet Inc Class A0.97%
Alphabet Inc Class C0.95%
Tesla Inc0.7%
NVIDIA Corp0.64%
JPMorgan Chase & Co0.62%
Tencent Holdings Ltd0.6%

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%.

IEF - Holdings

IEF Bond SectorsWeight
AAA100.0%
Others0.0%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

IEF’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.

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Risk Analysis

VTIEF
Mean Return0.90.32
R-squared99.3577.56
Std. Deviation14.195.42
Alpha0.2-1.2
Beta1.011.59
Sharpe Ratio0.710.6
Treynor Ratio9.51.97

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

The iShares 7-10 Year Treasury Bond ETF (IEF) has a Standard Deviation of 5.42 with a R-squared of 77.56 and a Sharpe Ratio of 0.6. Its Beta is 1.59 while IEF’s Treynor Ratio is 1.97. Furthermore, the fund has a Mean Return of 0.32 and a Alpha of -1.2.

VT’s Mean Return is 0.58 points higher than that of IEF and its R-squared is 21.79 points higher. With a Standard Deviation of 14.19, VT is slightly more volatile than IEF. The Alpha and Beta of VT are 1.40 points higher and 0.58 points lower than IEF’s Alpha and Beta.

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Performance

Annual Returns

VT vs. IEF - Annual Returns

YearVTIEF
202016.74%9.84%
201926.8%8.38%
2018-9.67%0.82%
201724.19%2.47%
20168.77%1.0%
2015-1.88%1.55%
20143.97%8.92%
201322.98%-6.12%
201217.33%4.06%
2011-7.71%15.46%
201013.05%9.29%

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 2011 was the strongest year for IEF, returning 15.46% on an annual basis. The poorest year for IEF in the last ten years was 2013, with a yield of -6.12%. Most years the iShares 7-10 Year Treasury Bond ETF has given investors modest returns, such as in 2017, 2012, and 2019, when gains were 2.47%, 4.06%, and 8.38% respectively.

Portfolio Growth

VT vs. IEF - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VT$10,000$27,73910.42%
IEF$10,000$16,9365.06%

A $10,000 investment in VT would have resulted in a final balance of $27,739. This is a profit of $17,739 over 11 years and amounts to a compound annual growth rate (CAGR) of 10.42%.

With a $10,000 investment in IEF, the end total would have been $16,936. This equates to a $6,936 profit over 11 years and a compound annual growth rate (CAGR) of 5.06%.

VT’s CAGR is 5.35 percentage points higher than that of IEF and as a result, would have yielded $10,803 more on a $10,000 investment. Thus, VT outperformed IEF by 5.35% annually.


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