The Vanguard Total Stock Market Index Fund ETF Shares (VTI) and the iShares Gold Trust (IAU) are both among the Top 100 ETFs. VTI is a Vanguard Large Blend fund and IAU is a iShares N/A fund. So, what’s the difference between VTI and IAU? And which fund is better?
The expense ratio of VTI is 0.22 percentage points lower than IAU’s (0.03% vs. 0.25%). VTI also has a higher exposure to the technology sector and a lower standard deviation. Overall, VTI has provided higher returns than IAU over the past ten years.
In this article, we’ll compare VTI vs. IAU. We’ll look at performance and holdings, as well as at their risk metrics and industry exposure. Moreover, I’ll also discuss VTI’s and IAU’s annual returns, portfolio growth, and fund composition and examine how these affect their overall returns.
|Name||Vanguard Total Stock Market Index Fund ETF Shares||iShares Gold Trust|
The Vanguard Total Stock Market Index Fund ETF Shares (VTI) is a Large Blend fund that is issued by Vanguard. It currently has 1.26T total assets under management and has yielded an average annual return of 14.70% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.03%.
The iShares Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.
VTI’s dividend yield is 1.26% higher than that of IAU (1.26% vs. 0.0%). Also, VTI yielded on average 8.66% more per year over the past decade (14.70% vs. 6.03%). The expense ratio of VTI is 0.22 percentage points lower than IAU’s (0.03% vs. 0.25%).
The Vanguard Total Stock Market Index Fund ETF Shares (VTI) has the most exposure to the Technology sector at 24.1%. This is followed by Financial Services and Healthcare at 13.77% and 13.64% respectively. Basic Materials (2.44%), Energy (2.77%), and Real Estate (3.59%) only make up 8.80% of the fund’s total assets.
VTI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.77%, 9.39%, 10.4%, 11.83%, and 13.64%.
The iShares Gold Trust (IAU) has the most exposure to the Technology sector at 0.0%. This is followed by Industrials and Energy at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.
IAU’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Energy stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
VTI is 24.10% more exposed to the Technology sector than IAU (24.1% vs 0.0%). VTI’s exposure to Financial Services and Healthcare stocks is 13.77% higher and 13.64% higher respectively (13.77% vs. 0.0% and 13.64% vs. 0.0%). In total, Basic Materials, Energy, and Real Estate also make up 8.80% more of the fund’s holdings compared to IAU (8.80% vs. 0.00%).
|Facebook Inc Class A||1.88%|
|Alphabet Inc Class A||1.66%|
|Alphabet Inc Class C||1.56%|
|Berkshire Hathaway Inc Class B||1.09%|
|JPMorgan Chase & Co||1.06%|
VTI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 4.9%, 4.6%, 3.33%, 1.88%, and 1.66%.
Alphabet Inc Class C (1.56%), Tesla Inc (1.18%), and Berkshire Hathaway Inc Class B (1.09%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VTI’s holdings at 1.07% and 1.06%.
IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.
N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.
VTI had its best year in 2013 with an annual return of 33.51%. VTI’s worst year over the past decade yielded -5.13% and occurred in 2018. In most years the Vanguard Total Stock Market Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2010 where annual returns amounted to 12.68%, 16.41%, and 17.26% respectively.
The year 2010 was the strongest year for IAU, returning 27.93% on an annual basis. The poorest year for IAU in the last ten years was 2013, with a yield of -27.96%. Most years the iShares Gold Trust has given investors modest returns, such as in 2012, 2011, and 2016, when gains were 8.37%, 8.66%, and 8.85% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VTI would have resulted in a final balance of $42,648. This is a profit of $32,648 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.70%.
With a $10,000 investment in IAU, the end total would have been $16,786. This equates to a $6,786 profit over 11 years and a compound annual growth rate (CAGR) of 6.03%.
VTI’s CAGR is 8.66 percentage points higher than that of IAU and as a result, would have yielded $25,862 more on a $10,000 investment. Thus, VTI outperformed IAU by 8.66% annually.
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