The Vanguard Value Index Fund ETF Shares (VTV) and the Vanguard Information Technology Index Fund ETF Shares (VGT) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and VGT is a Vanguard Technology fund. So, what’s the difference between VTV and VGT? And which fund is better?
The expense ratio of VTV is 0.06 percentage points lower than VGT’s (0.04% vs. 0.1%). VTV also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VTV has provided lower returns than VGT over the past ten years.
In this article, we’ll compare VTV vs. VGT. We’ll look at risk metrics and holdings, as well as at their annual returns and performance. Moreover, I’ll also discuss VTV’s and VGT’s fund composition, industry exposure, and portfolio growth and examine how these affect their overall returns.
Summary
| VTV | VGT | |
| Name | Vanguard Value Index Fund ETF Shares | Vanguard Information Technology Index Fund ETF Shares |
| Category | Large Value | Technology |
| Issuer | Vanguard | Vanguard |
| AUM | 125.77B | 54.13B |
| Avg. Return | 12.07% | 20.84% |
| Div. Yield | 2.15% | 0.66% |
| Expense Ratio | 0.04% | 0.1% |
The Vanguard Value Index Fund ETF Shares (VTV) is a Large Value fund that is issued by Vanguard. It currently has 125.77B total assets under management and has yielded an average annual return of 12.07% over the past 10 years. The fund has a dividend yield of 2.15% with an expense ratio of 0.04%.
The Vanguard Information Technology Index Fund ETF Shares (VGT) is a Technology fund that is issued by Vanguard. It currently has 54.13B total assets under management and has yielded an average annual return of 20.84% over the past 10 years. The fund has a dividend yield of 0.66% with an expense ratio of 0.1%.
VTV’s dividend yield is 1.49% higher than that of VGT (2.15% vs. 0.66%). Also, VTV yielded on average 8.76% less per year over the past decade (12.07% vs. 20.84%). The expense ratio of VTV is 0.06 percentage points lower than VGT’s (0.04% vs. 0.1%).
Fund Composition
Industry Exposure
| VTV | VGT | |
| Technology | 7.86% | 88.89% |
| Industrials | 12.61% | 1.67% |
| Energy | 5.59% | 0.0% |
| Communication Services | 5.49% | 0.61% |
| Utilities | 5.37% | 0.0% |
| Healthcare | 19.84% | 0.0% |
| Consumer Defensive | 10.72% | 0.0% |
| Real Estate | 3.01% | 0.0% |
| Financial Services | 22.81% | 8.83% |
| Consumer Cyclical | 3.79% | 0.0% |
| Basic Materials | 2.91% | 0.0% |
The Vanguard Value Index Fund ETF Shares (VTV) has the most exposure to the Financial Services sector at 22.81%. This is followed by Healthcare and Industrials at 19.84% and 12.61% respectively. Real Estate (3.01%), Consumer Cyclical (3.79%), and Utilities (5.37%) only make up 12.17% of the fund’s total assets.
VTV’s mid-section with moderate exposure is comprised of Communication Services, Energy, Technology, Consumer Defensive, and Industrials stocks at 5.49%, 5.59%, 7.86%, 10.72%, and 12.61%.
The Vanguard Information Technology Index Fund ETF Shares (VGT) has the most exposure to the Technology sector at 88.89%. This is followed by Financial Services and Industrials at 8.83% and 1.67% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
VGT’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Energy, Communication Services, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.61%, and 1.67%.
VTV is 13.98% more exposed to the Financial Services sector than VGT (22.81% vs 8.83%). VTV’s exposure to Healthcare and Industrials stocks is 19.84% higher and 10.94% higher respectively (19.84% vs. 0.0% and 12.61% vs. 1.67%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 12.17% more of the fund’s holdings compared to VGT (12.17% vs. 0.00%).
Holdings
| VTV Holdings | Weight |
| Berkshire Hathaway Inc Class B | 2.98% |
| JPMorgan Chase & Co | 2.82% |
| Johnson & Johnson | 2.6% |
| UnitedHealth Group Inc | 2.27% |
| Procter & Gamble Co | 1.98% |
| Bank of America Corp | 1.91% |
| Exxon Mobil Corp | 1.6% |
| Comcast Corp Class A | 1.57% |
| Intel Corp | 1.36% |
| Verizon Communications Inc | 1.32% |
VTV’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.98%, 2.82%, 2.6%, 2.27%, and 1.98%.
Bank of America Corp (1.91%), Exxon Mobil Corp (1.6%), and Comcast Corp Class A (1.57%) have a slightly smaller but still significant weight. Intel Corp and Verizon Communications Inc are also represented in the VTV’s holdings at 1.36% and 1.32%.
| VGT Holdings | Weight |
| Apple Inc | 19.58% |
| Microsoft Corp | 16.53% |
| NVIDIA Corp | 4.22% |
| Visa Inc Class A | 3.16% |
| PayPal Holdings Inc | 2.76% |
| Mastercard Inc Class A | 2.76% |
| Adobe Inc | 2.39% |
| Intel Corp | 1.94% |
| Salesforce.com Inc | 1.91% |
| Cisco Systems Inc | 1.9% |
VGT’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 19.58%, 16.53%, 4.22%, 3.16%, and 2.76%.
Mastercard Inc Class A (2.76%), Adobe Inc (2.39%), and Intel Corp (1.94%) have a slightly smaller but still significant weight. Salesforce.com Inc and Cisco Systems Inc are also represented in the VGT’s holdings at 1.91% and 1.9%.
Risk Analysis
| VTV | VGT | |
| Mean Return | 1.05 | 1.76 |
| R-squared | 92.61 | 74.84 |
| Std. Deviation | 13.78 | 16.61 |
| Alpha | -1.92 | 10.41 |
| Beta | 0.98 | 1.02 |
| Sharpe Ratio | 0.87 | 1.23 |
| Treynor Ratio | 11.94 | 20.55 |
The Vanguard Value Index Fund ETF Shares (VTV) has a Standard Deviation of 13.78 with a Sharpe Ratio of 0.87 and a Treynor Ratio of 11.94. Its Mean Return is 1.05 while VTV’s Beta is 0.98. Furthermore, the fund has a Alpha of -1.92 and a R-squared of 92.61.
The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Standard Deviation of 16.61 with a Alpha of 10.41 and a Sharpe Ratio of 1.23. Its Beta is 1.02 while VGT’s Mean Return is 1.76. Furthermore, the fund has a Treynor Ratio of 20.55 and a R-squared of 74.84.
VTV’s Mean Return is 0.71 points lower than that of VGT and its R-squared is 17.77 points higher. With a Standard Deviation of 13.78, VTV is slightly less volatile than VGT. The Alpha and Beta of VTV are 12.33 points lower and 0.04 points lower than VGT’s Alpha and Beta.
Performance
Annual Returns
| Year | VTV | VGT |
| 2020 | 2.23% | 45.94% |
| 2019 | 25.85% | 48.68% |
| 2018 | -5.39% | 2.52% |
| 2017 | 17.12% | 37.07% |
| 2016 | 16.88% | 13.73% |
| 2015 | -0.89% | 5.02% |
| 2014 | 13.19% | 18.01% |
| 2013 | 33.03% | 30.91% |
| 2012 | 15.19% | 14.05% |
| 2011 | 1.16% | 0.52% |
| 2010 | 14.45% | 12.74% |
VTV had its best year in 2013 with an annual return of 33.03%. VTV’s worst year over the past decade yielded -5.39% and occurred in 2018. In most years the Vanguard Value Index Fund ETF Shares provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.19%, 14.45%, and 15.19% respectively.
The year 2019 was the strongest year for VGT, returning 48.68% on an annual basis. The poorest year for VGT in the last ten years was 2011, with a yield of 0.52%. Most years the Vanguard Information Technology Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2014, when gains were 13.73%, 14.05%, and 18.01% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VTV | $10,000 | $33,163 | 12.07% |
| VGT | $10,000 | $72,718 | 20.84% |
A $10,000 investment in VTV would have resulted in a final balance of $33,163. This is a profit of $23,163 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.07%.
With a $10,000 investment in VGT, the end total would have been $72,718. This equates to a $62,718 profit over 11 years and a compound annual growth rate (CAGR) of 20.84%.
VTV’s CAGR is 8.76 percentage points lower than that of VGT and as a result, would have yielded $39,555 less on a $10,000 investment. Thus, VTV performed worse than VGT by 8.76% annually.
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