The Vanguard Total Stock Market Index Fund ETF Shares (VTI) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. VTI is a Vanguard Large Blend fund and TLT is a iShares Long Government fund. So, what’s the difference between VTI and TLT? And which fund is better?
The expense ratio of VTI is 0.12 percentage points lower than TLT’s (0.03% vs. 0.15%). VTI also has a high exposure to the technology sector while TLT is mostly comprised of AAA bonds. Overall, VTI has provided higher returns than TLT over the past ten years.
In this article, we’ll compare VTI vs. TLT. We’ll look at performance and holdings, as well as at their fund composition and portfolio growth. Moreover, I’ll also discuss VTI’s and TLT’s annual returns, risk metrics, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Total Stock Market Index Fund ETF Shares||iShares 20+ Year Treasury Bond ETF|
|Category||Large Blend||Long Government|
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 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%.
VTI’s dividend yield is 0.24% lower than that of TLT (1.26% vs. 1.5%). Also, VTI yielded on average 5.70% more per year over the past decade (14.70% vs. 9.00%). The expense ratio of VTI is 0.12 percentage points lower than TLT’s (0.03% vs. 0.15%).
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|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%.
|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.
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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 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 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 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%.
VTI’s CAGR is 5.70 percentage points higher than that of TLT and as a result, would have yielded $18,839 more on a $10,000 investment. Thus, VTI outperformed TLT by 5.70% annually.
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