The Vanguard Total World Stock Index Fund ETF Shares (VT) and the iShares MSCI USA Quality Factor ETF (QUAL) are both among the Top 100 ETFs. VT is a Vanguard N/A fund and QUAL is a iShares Large Blend fund. So, what’s the difference between VT and QUAL? And which fund is better?
The expense ratio of VT is 0.07 percentage points lower than QUAL’s (0.08% vs. 0.15%). VT also has a lower exposure to the technology sector and a higher standard deviation. Overall, VT has provided lower returns than QUAL over the past 7 years.
In this article, we’ll compare VT vs. QUAL. We’ll look at portfolio growth and holdings, as well as at their annual returns and performance. Moreover, I’ll also discuss VT’s and QUAL’s risk metrics, fund composition, and industry exposure and examine how these affect their overall returns.
Summary
| VT | QUAL | |
| NameVanguard Total World Stock Index Fund ETF SharesiShares MSCI USA Quality Factor ETF | ||
| Category | N/A | Large Blend |
| Issuer | Vanguard | iShares |
| AUM | 30.44B | 23.93B |
| Avg. Return | 10.42% | 13.42% |
| Div. Yield | 1.65% | 1.29% |
| Expense Ratio | 0.08% | 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 MSCI USA Quality Factor ETF (QUAL) is a Large Blend fund that is issued by iShares. It currently has 23.93B total assets under management and has yielded an average annual return of 13.42% over the past 10 years. The fund has a dividend yield of 1.29% with an expense ratio of 0.15%.
VT’s dividend yield is 0.36% higher than that of QUAL (1.65% vs. 1.29%). Also, VT yielded on average 3.01% less per year over the past decade (10.42% vs. 13.42%). The expense ratio of VT is 0.07 percentage points lower than QUAL’s (0.08% vs. 0.15%).
Fund Composition
Industry Exposure
| VT | QUAL | |
| Technology | 19.63% | 22.52% |
| Industrials | 10.7% | 9.22% |
| Energy | 3.48% | 2.24% |
| Communication Services | 9.02% | 11.44% |
| Utilities | 2.6% | 2.41% |
| Healthcare | 11.58% | 13.22% |
| Consumer Defensive | 6.71% | 8.57% |
| Real Estate | 3.64% | 2.72% |
| Financial Services | 15.36% | 15.87% |
| Consumer Cyclical | 12.32% | 9.43% |
| Basic Materials | 4.97% | 2.35% |
The Vanguard Total World Stock Index Fund ETF Shares (VT) has the most exposure to the Technology sector at 19.63%. This is followed by Financial Services and Consumer Cyclical at 15.36% and 12.32% respectively. Energy (3.48%), Real Estate (3.64%), and Basic Materials (4.97%) only make up 12.09% of the fund’s total assets.
VT’s mid-section with moderate exposure is comprised of Consumer Defensive, Communication Services, Industrials, Healthcare, and Consumer Cyclical stocks at 6.71%, 9.02%, 10.7%, 11.58%, and 12.32%.
The iShares MSCI USA Quality Factor ETF (QUAL) has the most exposure to the Technology sector at 22.52%. This is followed by Financial Services and Healthcare at 15.87% and 13.22% respectively. Basic Materials (2.35%), Utilities (2.41%), and Real Estate (2.72%) only make up 7.48% of the fund’s total assets.
QUAL’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Consumer Cyclical, Communication Services, and Healthcare stocks at 8.57%, 9.22%, 9.43%, 11.44%, and 13.22%.
VT is 2.89% less exposed to the Technology sector than QUAL (19.63% vs 22.52%). VT’s exposure to Financial Services and Consumer Cyclical stocks is 0.51% lower and 2.89% higher respectively (15.36% vs. 15.87% and 12.32% vs. 9.43%). In total, Energy, Real Estate, and Basic Materials also make up 4.78% more of the fund’s holdings compared to QUAL (12.09% vs. 7.31%).
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%.
| QUAL Holdings | Weight |
| Facebook Inc Class A | 4.77% |
| Nike Inc Class B | 4.05% |
| Microsoft Corp | 3.54% |
| Apple Inc | 3.52% |
| Johnson & Johnson | 2.99% |
| BlackRock Inc | 2.87% |
| Target Corp | 2.8% |
| Mastercard Inc Class A | 2.72% |
| NVIDIA Corp | 2.71% |
| Alphabet Inc Class A | 2.49% |
QUAL’s Top Holdings are Facebook Inc Class A, Nike Inc Class B, Microsoft Corp, Apple Inc, and Johnson & Johnson at 4.77%, 4.05%, 3.54%, 3.52%, and 2.99%.
BlackRock Inc (2.87%), Target Corp (2.8%), and Mastercard Inc Class A (2.72%) have a slightly smaller but still significant weight. NVIDIA Corp and Alphabet Inc Class A are also represented in the QUAL’s holdings at 2.71% and 2.49%.
Risk Analysis
| VT | QUAL | |
| 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 Beta of 1.01 and a Sharpe Ratio of 0.71. Its Standard Deviation is 14.19 while VT’s Alpha is 0.2. Furthermore, the fund has a Treynor Ratio of 9.5 and a Mean Return of 0.9.
The iShares MSCI USA Quality Factor ETF (QUAL) has a R-squared of 0 with a Alpha of 0 and a Mean Return of 0. Its Beta is 0 while QUAL’s Sharpe Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a Treynor Ratio of 0.
VT’s Mean Return is 0.90 points higher than that of QUAL and its R-squared is 99.35 points higher. With a Standard Deviation of 14.19, VT is slightly more volatile than QUAL. The Alpha and Beta of VT are 0.20 points higher and 1.01 points higher than QUAL’s Alpha and Beta.
Performance
Annual Returns
| Year | VT | QUAL |
| 2020 | 16.74% | 16.96% |
| 2019 | 26.8% | 34.14% |
| 2018 | -9.67% | -5.77% |
| 2017 | 24.19% | 22.26% |
| 2016 | 8.77% | 9.18% |
| 2015 | -1.88% | 5.56% |
| 2014 | 3.97% | 11.62% |
| 2013 | 22.98% | 0.0% |
| 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 2019 was the strongest year for QUAL, returning 34.14% on an annual basis. The poorest year for QUAL in the last ten years was 2018, with a yield of -5.77%. Most years the iShares MSCI USA Quality Factor ETF has given investors modest returns, such as in 2010, 2015, and 2016, when gains were 0.0%, 5.56%, and 9.18% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VT | $10,000 | $18,426 | 10.42% |
| QUAL | $10,000 | $23,251 | 13.42% |
A $10,000 investment in VT would have resulted in a final balance of $18,426. This is a profit of $8,426 over 7 years and amounts to a compound annual growth rate (CAGR) of 10.42%.
With a $10,000 investment in QUAL, the end total would have been $23,251. This equates to a $13,251 profit over 7 years and a compound annual growth rate (CAGR) of 13.42%.
VT’s CAGR is 3.01 percentage points lower than that of QUAL and as a result, would have yielded $4,825 less on a $10,000 investment. Thus, VT performed worse than QUAL by 3.01% annually.
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