The Vanguard Total World Stock Index Fund ETF Shares (VT) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. VT is a Vanguard N/A fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between VT and VTIP? And which fund is better?
The expense ratio of VT is 0.03 percentage points higher than VTIP’s (0.08% vs. 0.05%). VT also has a high exposure to the technology sector while VTIP is mostly comprised of AAA bonds. Overall, VT has provided higher returns than VTIP over the past 7 years.
In this article, we’ll compare VT vs. VTIP. We’ll look at fund composition and portfolio growth, as well as at their annual returns and risk metrics. Moreover, I’ll also discuss VT’s and VTIP’s holdings, performance, and industry exposure and examine how these affect their overall returns.
Summary
| VT | VTIP | |
| Name | Vanguard Total World Stock Index Fund ETF Shares | Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares |
| Category | N/A | Inflation-Protected Bond |
| Issuer | Vanguard | Vanguard |
| AUM | 30.44B | 50.67B |
| Avg. Return | 10.42% | 1.79% |
| Div. Yield | 1.65% | 1.35% |
| Expense Ratio | 0.08% | 0.05% |
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 Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.
VT’s dividend yield is 0.30% higher than that of VTIP (1.65% vs. 1.35%). Also, VT yielded on average 8.62% more per year over the past decade (10.42% vs. 1.79%). The expense ratio of VT is 0.03 percentage points higher than VTIP’s (0.08% vs. 0.05%).
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Fund Composition
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%.
| VTIP Bond Sectors | Weight |
| AAA | 99.87% |
| Others | 0.13% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 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
| VT | VTIP | |
| 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 Beta of 1.01 with a Standard Deviation of 14.19 and a Treynor Ratio of 9.5. 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 Mean Return of 0.9.
The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Beta of 0 with a Alpha of 0 and a R-squared of 0. Its Standard Deviation is 0 while VTIP’s Treynor Ratio is 0. Furthermore, the fund has a Mean Return of 0 and a Sharpe Ratio of 0.
VT’s Mean Return is 0.90 points higher than that of VTIP and its R-squared is 99.35 points higher. With a Standard Deviation of 14.19, VT is slightly more volatile than VTIP. The Alpha and Beta of VT are 0.20 points higher and 1.01 points higher than VTIP’s Alpha and Beta.
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Performance
Annual Returns
| Year | VT | VTIP |
| 2020 | 16.74% | 4.97% |
| 2019 | 26.8% | 4.83% |
| 2018 | -9.67% | 0.54% |
| 2017 | 24.19% | 0.82% |
| 2016 | 8.77% | 2.71% |
| 2015 | -1.88% | -0.15% |
| 2014 | 3.97% | -1.17% |
| 2013 | 22.98% | -1.55% |
| 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 2020 was the strongest year for VTIP, returning 4.97% on an annual basis. The poorest year for VTIP in the last ten years was 2013, with a yield of -1.55%. Most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 0.54% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VT | $10,000 | $18,426 | 10.42% |
| VTIP | $10,000 | $11,305 | 1.79% |
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 VTIP, the end total would have been $11,305. This equates to a $1,305 profit over 7 years and a compound annual growth rate (CAGR) of 1.79%.
VT’s CAGR is 8.62 percentage points higher than that of VTIP and as a result, would have yielded $7,121 more on a $10,000 investment. Thus, VT outperformed VTIP by 8.62% annually.
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