The Vanguard Total World Stock Index Fund ETF Shares (VT) and the Vanguard Health Care Index Fund ETF Shares (VHT) are both among the Top 100 ETFs. VT is a Vanguard N/A fund and VHT is a Vanguard Health fund. So, what’s the difference between VT and VHT? And which fund is better?
The expense ratio of VT is 0.02 percentage points lower than VHT’s (0.08% vs. 0.1%). VT also has a higher exposure to the technology sector and a higher standard deviation. Overall, VT has provided lower returns than VHT over the past 11 years.
In this article, we’ll compare VT vs. VHT. We’ll look at fund composition and annual returns, as well as at their performance and portfolio growth. Moreover, I’ll also discuss VT’s and VHT’s holdings, risk metrics, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Total World Stock Index Fund ETF Shares||Vanguard Health Care Index Fund ETF Shares|
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 Health Care Index Fund ETF Shares (VHT) is a Health fund that is issued by Vanguard. It currently has 17.94B total assets under management and has yielded an average annual return of 16.04% over the past 10 years. The fund has a dividend yield of 1.15% with an expense ratio of 0.1%.
VT’s dividend yield is 0.50% higher than that of VHT (1.65% vs. 1.15%). Also, VT yielded on average 5.62% less per year over the past decade (10.42% vs. 16.04%). The expense ratio of VT is 0.02 percentage points lower than VHT’s (0.08% vs. 0.1%).
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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 Health Care Index Fund ETF Shares (VHT) has the most exposure to the Healthcare sector at 99.57%. This is followed by Basic Materials and Technology at 0.31% and 0.05% respectively. Real Estate (0.0%), Consumer Defensive (0.0%), and Utilities (0.0%) only make up 0.00% of the fund’s total assets.
VHT’s mid-section with moderate exposure is comprised of Communication Services, Energy, Financial Services, Industrials, and Technology stocks at 0.0%, 0.0%, 0.02%, 0.05%, and 0.05%.
VT is 19.58% more exposed to the Technology sector than VHT (19.63% vs 0.05%). VT’s exposure to Financial Services and Consumer Cyclical stocks is 15.34% higher and 12.32% higher respectively (15.36% vs. 0.02% and 12.32% vs. 0.0%). In total, Energy, Real Estate, and Basic Materials also make up 11.78% more of the fund’s holdings compared to VHT (12.09% vs. 0.31%).
|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%.
|Johnson & Johnson||7.34%|
|UnitedHealth Group Inc||6.44%|
|Thermo Fisher Scientific Inc||3.37%|
|Merck & Co Inc||3.33%|
|Eli Lilly and Co||3.17%|
VHT’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and Thermo Fisher Scientific Inc at 7.34%, 6.44%, 3.7%, 3.48%, and 3.37%.
AbbVie Inc (3.37%), Merck & Co Inc (3.33%), and Eli Lilly and Co (3.17%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the VHT’s holdings at 2.91% and 2.83%.
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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 Standard Deviation of 14.19. Its Mean Return is 0.9 while VT’s R-squared is 99.35. Furthermore, the fund has a Alpha of 0.2 and a Beta of 1.01.
The Vanguard Health Care Index Fund ETF Shares (VHT) has a Sharpe Ratio of 1.13 with a Alpha of 7.99 and a Standard Deviation of 13.58. Its Beta is 0.75 while VHT’s Mean Return is 1.33. Furthermore, the fund has a R-squared of 59.86 and a Treynor Ratio of 20.74.
VT’s Mean Return is 0.43 points lower than that of VHT and its R-squared is 39.49 points higher. With a Standard Deviation of 14.19, VT is slightly more volatile than VHT. The Alpha and Beta of VT are 7.79 points lower and 0.26 points higher than VHT’s Alpha and Beta.
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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 2013 was the strongest year for VHT, returning 42.67% on an annual basis. The poorest year for VHT in the last ten years was 2016, with a yield of -3.33%. Most years the Vanguard Health Care Index Fund ETF Shares has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 10.57%, 18.21%, and 19.1% 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 VHT, the end total would have been $48,464. This equates to a $38,464 profit over 11 years and a compound annual growth rate (CAGR) of 16.04%.
VT’s CAGR is 5.62 percentage points lower than that of VHT and as a result, would have yielded $20,725 less on a $10,000 investment. Thus, VT performed worse than VHT by 5.62% annually.
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