VTV vs. VHT: What’s The Difference?

The Vanguard Value Index Fund ETF Shares (VTV) and the Vanguard Health Care Index Fund ETF Shares (VHT) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and VHT is a Vanguard Health fund. So, what’s the difference between VTV and VHT? And which fund is better?

The expense ratio of VTV is 0.06 percentage points lower than VHT’s (0.04% vs. 0.1%). VTV also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VTV has provided lower returns than VHT over the past ten years.

In this article, we’ll compare VTV vs. VHT. We’ll look at fund composition and performance, as well as at their annual returns and industry exposure. Moreover, I’ll also discuss VTV’s and VHT’s holdings, portfolio growth, and risk metrics and examine how these affect their overall returns.

Summary

VTV VHT
Name Vanguard Value Index Fund ETF Shares Vanguard Health Care Index Fund ETF Shares
Category Large Value Health
Issuer Vanguard Vanguard
AUM 125.77B 17.94B
Avg. Return 12.07% 16.04%
Div. Yield 2.15% 1.15%
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 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%.

VTV’s dividend yield is 1.00% higher than that of VHT (2.15% vs. 1.15%). Also, VTV yielded on average 3.96% less per year over the past decade (12.07% vs. 16.04%). The expense ratio of VTV is 0.06 percentage points lower than VHT’s (0.04% vs. 0.1%).

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Fund Composition

Industry Exposure

VTV vs. VHT - Industry Exposure

VTV VHT
Technology 7.86% 0.05%
Industrials 12.61% 0.05%
Energy 5.59% 0.0%
Communication Services 5.49% 0.0%
Utilities 5.37% 0.0%
Healthcare 19.84% 99.57%
Consumer Defensive 10.72% 0.0%
Real Estate 3.01% 0.0%
Financial Services 22.81% 0.02%
Consumer Cyclical 3.79% 0.0%
Basic Materials 2.91% 0.31%

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 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%.

VTV is 22.79% more exposed to the Financial Services sector than VHT (22.81% vs 0.02%). VTV’s exposure to Healthcare and Industrials stocks is 79.73% lower and 12.56% higher respectively (19.84% vs. 99.57% and 12.61% vs. 0.05%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 12.17% more of the fund’s holdings compared to VHT (12.17% vs. 0.00%).

Holdings

VTV - 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%.

VHT - Holdings

VHT Holdings Weight
Johnson & Johnson 7.34%
UnitedHealth Group Inc 6.44%
Pfizer Inc 3.7%
Abbott Laboratories 3.48%
Thermo Fisher Scientific Inc 3.37%
AbbVie Inc 3.37%
Merck & Co Inc 3.33%
Eli Lilly and Co 3.17%
Danaher Corp 2.91%
Medtronic PLC 2.83%

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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Risk Analysis

VTV VHT
Mean Return 1.05 1.33
R-squared 92.61 59.86
Std. Deviation 13.78 13.58
Alpha -1.92 7.99
Beta 0.98 0.75
Sharpe Ratio 0.87 1.13
Treynor Ratio 11.94 20.74

The Vanguard Value Index Fund ETF Shares (VTV) has a Mean Return of 1.05 with a Standard Deviation of 13.78 and a Treynor Ratio of 11.94. Its Alpha is -1.92 while VTV’s Beta is 0.98. Furthermore, the fund has a R-squared of 92.61 and a Sharpe Ratio of 0.87.

The Vanguard Health Care Index Fund ETF Shares (VHT) has a Alpha of 7.99 with a Mean Return of 1.33 and a Beta of 0.75. Its Treynor Ratio is 20.74 while VHT’s Standard Deviation is 13.58. Furthermore, the fund has a Sharpe Ratio of 1.13 and a R-squared of 59.86.

VTV’s Mean Return is 0.28 points lower than that of VHT and its R-squared is 32.75 points higher. With a Standard Deviation of 13.78, VTV is slightly more volatile than VHT. The Alpha and Beta of VTV are 9.91 points lower and 0.23 points higher than VHT’s Alpha and Beta.

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Performance

Annual Returns

VTV vs. VHT - Annual Returns

Year VTV VHT
2020 2.23% 18.21%
2019 25.85% 21.97%
2018 -5.39% 5.55%
2017 17.12% 23.34%
2016 16.88% -3.33%
2015 -0.89% 7.22%
2014 13.19% 25.38%
2013 33.03% 42.67%
2012 15.19% 19.1%
2011 1.16% 10.57%
2010 14.45% 5.75%

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 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.

Portfolio Growth

VTV vs. VHT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VTV $10,000 $33,163 12.07%
VHT $10,000 $48,464 16.04%

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 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%.

VTV’s CAGR is 3.96 percentage points lower than that of VHT and as a result, would have yielded $15,301 less on a $10,000 investment. Thus, VTV performed worse than VHT by 3.96% annually.


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