VT vs. VGK: What’s The Difference?

The Vanguard Total World Stock Index Fund ETF Shares (VT) and the Vanguard FTSE Europe Index Fund ETF Shares (VGK) are both among the Top 100 ETFs. VT is a Vanguard N/A fund and VGK is a Vanguard Europe Stock fund. So, what’s the difference between VT and VGK? And which fund is better?

VT and VGK have the same expense ratio: 0.08%. VT also has a higher exposure to the technology sector and a lower standard deviation. Overall, VT has provided higher returns than VGK over the past 11 years.

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

Summary

VT VGK
Name Vanguard Total World Stock Index Fund ETF Shares Vanguard FTSE Europe Index Fund ETF Shares
Category N/A Europe Stock
Issuer Vanguard Vanguard
AUM 30.44B 25.7B
Avg. Return 10.42% 6.68%
Div. Yield 1.65% 2.52%
Expense Ratio 0.08% 0.08%

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 Vanguard FTSE Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% with an expense ratio of 0.08%.

VT’s dividend yield is 0.87% lower than that of VGK (1.65% vs. 2.52%). Also, VT yielded on average 3.74% more per year over the past decade (10.42% vs. 6.68%). VT and VGK have the same expense ratio: 0.08%.

Fund Composition

Industry Exposure

VT vs. VGK - Industry Exposure

VT VGK
Technology 19.63% 8.3%
Industrials 10.7% 15.58%
Energy 3.48% 4.3%
Communication Services 9.02% 5.09%
Utilities 2.6% 3.89%
Healthcare 11.58% 13.76%
Consumer Defensive 6.71% 11.39%
Real Estate 3.64% 2.57%
Financial Services 15.36% 15.85%
Consumer Cyclical 12.32% 11.6%
Basic Materials 4.97% 7.67%

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 Vanguard FTSE Europe Index Fund ETF Shares (VGK) has the most exposure to the Financial Services sector at 15.85%. This is followed by Industrials and Healthcare at 15.58% and 13.76% respectively. Utilities (3.89%), Energy (4.3%), and Communication Services (5.09%) only make up 13.28% of the fund’s total assets.

VGK’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.67%, 8.3%, 11.39%, 11.6%, and 13.76%.

VT is 11.33% more exposed to the Technology sector than VGK (19.63% vs 8.3%). VT’s exposure to Financial Services and Consumer Cyclical stocks is 0.49% lower and 0.72% higher respectively (15.36% vs. 15.85% and 12.32% vs. 11.6%). In total, Energy, Real Estate, and Basic Materials also make up 2.45% less of the fund’s holdings compared to VGK (12.09% vs. 14.54%).

Holdings

VT - 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%.

VGK - Holdings

VGK Holdings Weight
Nestle SA 2.82%
ASML Holding NV 2.2%
Roche Holding AG 2.13%
LVMH Moet Hennessy Louis Vuitton SE 1.58%
Novartis AG 1.55%
AstraZeneca PLC 1.27%
SAP SE 1.25%
Unilever PLC 1.23%
Novo Nordisk A/S B 1.09%
Siemens AG 0.96%

VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.

AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.

Risk Analysis

VT VGK
Mean Return 0.9 0.61
R-squared 99.35 92.76
Std. Deviation 14.19 16.65
Alpha 0.2 0.45
Beta 1.01 1.06
Sharpe Ratio 0.71 0.4
Treynor Ratio 9.5 5.12

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

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Standard Deviation of 16.65 with a Alpha of 0.45 and a Beta of 1.06. Its Mean Return is 0.61 while VGK’s R-squared is 92.76. Furthermore, the fund has a Sharpe Ratio of 0.4 and a Treynor Ratio of 5.12.

VT’s Mean Return is 0.29 points higher than that of VGK and its R-squared is 6.59 points higher. With a Standard Deviation of 14.19, VT is slightly less volatile than VGK. The Alpha and Beta of VT are 0.25 points lower and 0.05 points lower than VGK’s Alpha and Beta.

Performance

Annual Returns

VT vs. VGK - Annual Returns

Year VT VGK
2020 16.74% 6.5%
2019 26.8% 24.26%
2018 -9.67% -14.79%
2017 24.19% 27.06%
2016 8.77% -0.59%
2015 -1.88% -1.87%
2014 3.97% -6.56%
2013 22.98% 24.93%
2012 17.33% 21.01%
2011 -7.71% -11.49%
2010 13.05% 5.01%

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 2017 was the strongest year for VGK, returning 27.06% on an annual basis. The poorest year for VGK in the last ten years was 2018, with a yield of -14.79%. Most years the Vanguard FTSE Europe Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were -0.59%, 5.01%, and 6.5% respectively.

Portfolio Growth

VT vs. VGK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VT $10,000 $27,739 10.42%
VGK $10,000 $18,350 6.68%

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 VGK, the end total would have been $18,350. This equates to a $8,350 profit over 11 years and a compound annual growth rate (CAGR) of 6.68%.

VT’s CAGR is 3.74 percentage points higher than that of VGK and as a result, would have yielded $9,389 more on a $10,000 investment. Thus, VT outperformed VGK by 3.74% annually.


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