The Vanguard Growth Index Fund ETF Shares (VUG) and the iShares Gold Trust (IAU) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and IAU is a iShares N/A fund. So, what’s the difference between VUG and IAU? And which fund is better?
The expense ratio of VUG is 0.21 percentage points lower than IAU’s (0.04% vs. 0.25%). VUG also has a higher exposure to the technology sector and a lower standard deviation. Overall, VUG has provided higher returns than IAU over the past ten years.
In this article, we’ll compare VUG vs. IAU. We’ll look at portfolio growth and fund composition, as well as at their performance and risk metrics. Moreover, I’ll also discuss VUG’s and IAU’s annual returns, industry exposure, and holdings and examine how these affect their overall returns.
|Name||Vanguard Growth Index Fund ETF Shares||iShares Gold Trust|
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 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%.
VUG’s dividend yield is 0.57% higher than that of IAU (0.57% vs. 0.0%). Also, VUG yielded on average 11.55% more per year over the past decade (17.58% vs. 6.03%). The expense ratio of VUG is 0.21 percentage points lower than IAU’s (0.04% vs. 0.25%).
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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 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%.
VUG is 39.05% more exposed to the Technology sector than IAU (39.05% vs 0.0%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 17.78% higher and 16.49% higher respectively (17.78% vs. 0.0% and 16.49% vs. 0.0%). In total, Energy, Basic Materials, and Consumer Defensive also make up 4.25% more of the fund’s holdings compared to IAU (4.25% vs. 0.00%).
|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%.
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%.
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The Vanguard Growth Index Fund ETF Shares (VUG) has a Treynor Ratio of 16.13 with a Beta of 1.04 and a Mean Return of 1.44. Its R-squared is 92.48 while VUG’s Alpha is 1.81. Furthermore, the fund has a Sharpe Ratio of 1.13 and a Standard Deviation of 14.76.
The iShares Gold Trust (IAU) has a R-squared of 16.03 with a Treynor Ratio of 1.5 and a Beta of 0.48. Its Mean Return is 0.23 while IAU’s Alpha is 4.16. Furthermore, the fund has a Sharpe Ratio of 0.13 and a Standard Deviation of 16.97.
VUG’s Mean Return is 1.21 points higher than that of IAU and its R-squared is 76.45 points higher. With a Standard Deviation of 14.76, VUG is slightly less volatile than IAU. The Alpha and Beta of VUG are 2.35 points lower and 0.56 points higher than IAU’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 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 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 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%.
VUG’s CAGR is 11.55 percentage points higher than that of IAU and as a result, would have yielded $37,949 more on a $10,000 investment. Thus, VUG outperformed IAU by 11.55% annually.
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