The Vanguard Total World Stock Index Fund ETF Shares (VT) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. VT is a Vanguard N/A fund and TLT is a iShares Long Government fund. So, what’s the difference between VT and TLT? And which fund is better?
The expense ratio of VT is 0.07 percentage points lower than TLT’s (0.08% vs. 0.15%). VT also has a high exposure to the technology sector while TLT is mostly comprised of AAA bonds. Overall, VT has provided higher returns than TLT over the past 11 years.
In this article, we’ll compare VT vs. TLT. We’ll look at risk metrics and fund composition, as well as at their holdings and performance. Moreover, I’ll also discuss VT’s and TLT’s industry exposure, annual returns, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Total World Stock Index Fund ETF Shares||iShares 20+ Year Treasury Bond ETF|
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 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%.
VT’s dividend yield is 0.15% higher than that of TLT (1.65% vs. 1.5%). Also, VT yielded on average 1.42% more per year over the past decade (10.42% vs. 9.00%). The expense ratio of VT is 0.07 percentage points lower than TLT’s (0.08% vs. 0.15%).
|Facebook Inc Class A||1.1%|
|Alphabet Inc Class A||0.97%|
|Alphabet Inc Class C||0.95%|
|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%.
|TLT Bond Sectors||Weight|
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.
The Vanguard Total World Stock Index Fund ETF Shares (VT) has a Mean Return of 0.9 with a Beta of 1.01 and a Standard Deviation of 14.19. Its Sharpe Ratio is 0.71 while VT’s R-squared is 99.35. Furthermore, the fund has a Alpha of 0.2 and a Treynor Ratio of 9.5.
The iShares 20+ Year Treasury Bond ETF (TLT) has a Alpha of -2.83 with a R-squared of 68.76 and a Sharpe Ratio of 0.55. Its Treynor Ratio is 1.82 while TLT’s Beta is 3.54. Furthermore, the fund has a Mean Return of 0.63 and a Standard Deviation of 12.76.
VT’s Mean Return is 0.27 points higher than that of TLT and its R-squared is 30.59 points higher. With a Standard Deviation of 14.19, VT is slightly more volatile than TLT. The Alpha and Beta of VT are 3.03 points higher and 2.53 points lower than TLT’s Alpha and Beta.
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 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.
|Fund||Initial Balance||Final Balance||CAGR|
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 TLT, the end total would have been $23,809. This equates to a $13,809 profit over 11 years and a compound annual growth rate (CAGR) of 9.00%.
VT’s CAGR is 1.42 percentage points higher than that of TLT and as a result, would have yielded $3,930 more on a $10,000 investment. Thus, VT outperformed TLT by 1.42% annually.
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