The Vanguard Growth Index Fund ETF Shares (VUG) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and ACWI is a iShares N/A fund. So, what’s the difference between VUG and ACWI? And which fund is better?
The expense ratio of VUG is 0.28 percentage points lower than ACWI’s (0.04% vs. 0.32%). VUG also has a higher exposure to the technology sector and a higher standard deviation. Overall, VUG has provided higher returns than ACWI over the past ten years.
In this article, we’ll compare VUG vs. ACWI. We’ll look at fund composition and portfolio growth, as well as at their annual returns and holdings. Moreover, I’ll also discuss VUG’s and ACWI’s performance, industry exposure, and risk metrics and examine how these affect their overall returns.
|Name||Vanguard Growth Index Fund ETF Shares||iShares MSCI ACWI ETF|
The Vanguard Growth Index Fund ETF Shares (VUG) is a Large Growth fund that is issued by Vanguard. It currently has 165.53B total assets under management and has yielded an average annual return of 17.58% over the past 10 years. The fund has a dividend yield of 0.57% with an expense ratio of 0.04%.
The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.
VUG’s dividend yield is 0.82% lower than that of ACWI (0.57% vs. 1.39%). Also, VUG yielded on average 7.36% more per year over the past decade (17.58% vs. 10.21%). The expense ratio of VUG is 0.28 percentage points lower than ACWI’s (0.04% vs. 0.32%).
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The Vanguard Growth Index Fund ETF Shares (VUG) has the most exposure to the Technology sector at 39.05%. This is followed by Consumer Cyclical and Communication Services at 17.78% and 16.49% respectively. Energy (0.32%), Basic Materials (1.52%), and Consumer Defensive (2.41%) only make up 4.25% of the fund’s total assets.
VUG’s mid-section with moderate exposure is comprised of Real Estate, Industrials, Financial Services, Healthcare, and Communication Services stocks at 2.46%, 5.13%, 6.75%, 8.09%, and 16.49%.
The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.
ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.
VUG is 18.64% more exposed to the Technology sector than ACWI (39.05% vs 20.41%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 5.77% higher and 6.62% higher respectively (17.78% vs. 12.01% and 16.49% vs. 9.87%). In total, Energy, Basic Materials, and Consumer Defensive also make up 11.11% less of the fund’s holdings compared to ACWI (4.25% vs. 15.36%).
|Facebook Inc Class A||3.89%|
|Alphabet Inc Class A||3.43%|
|Alphabet Inc Class C||3.22%|
|Visa Inc Class A||1.78%|
|PayPal Holdings Inc||1.6%|
VUG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.13%, 9.52%, 6.88%, 3.89%, and 3.43%.
Alphabet Inc Class C (3.22%), Tesla Inc (2.44%), and NVIDIA Corp (2.21%) have a slightly smaller but still significant weight. Visa Inc Class A and PayPal Holdings Inc are also represented in the VUG’s holdings at 1.78% and 1.6%.
|Facebook Inc A||1.25%|
|Alphabet Inc Class C||1.12%|
|Alphabet Inc A||1.09%|
|Taiwan Semiconductor Manufacturing Co Ltd||0.79%|
|JPMorgan Chase & Co||0.71%|
ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.
Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.
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The Vanguard Growth Index Fund ETF Shares (VUG) has a Beta of 1.04 with a Treynor Ratio of 16.13 and a Standard Deviation of 14.76. Its R-squared is 92.48 while VUG’s Mean Return is 1.44. Furthermore, the fund has a Alpha of 1.81 and a Sharpe Ratio of 1.13.
The iShares MSCI ACWI ETF (ACWI) has a Sharpe Ratio of 0.71 with a Mean Return of 0.89 and a Beta of 1. Its Standard Deviation is 14.05 while ACWI’s R-squared is 99.96. Furthermore, the fund has a Alpha of 0.15 and a Treynor Ratio of 9.45.
VUG’s Mean Return is 0.55 points higher than that of ACWI and its R-squared is 7.48 points lower. With a Standard Deviation of 14.76, VUG is slightly more volatile than ACWI. The Alpha and Beta of VUG are 1.66 points higher and 0.04 points higher than ACWI’s Alpha and Beta.
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VUG had its best year in 2020 with an annual return of 40.16%. VUG’s worst year over the past decade yielded -3.32% and occurred in 2018. In most years the Vanguard Growth Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 13.62%, 17.03%, and 17.11% respectively.
The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VUG would have resulted in a final balance of $54,735. This is a profit of $44,735 over 11 years and amounts to a compound annual growth rate (CAGR) of 17.58%.
With a $10,000 investment in ACWI, the end total would have been $27,241. This equates to a $17,241 profit over 11 years and a compound annual growth rate (CAGR) of 10.21%.
VUG’s CAGR is 7.36 percentage points higher than that of ACWI and as a result, would have yielded $27,494 more on a $10,000 investment. Thus, VUG outperformed ACWI by 7.36% annually.
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