The Vanguard Growth Index Fund ETF Shares (VUG) and the iShares Core S&P Total U.S. Stock Market ETF (ITOT) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and ITOT is a iShares Large Blend fund. So, what’s the difference between VUG and ITOT? And which fund is better?
The expense ratio of VUG is 0.01 percentage points higher than ITOT’s (0.04% vs. 0.03%). VUG also has a higher exposure to the technology sector and a higher standard deviation. Overall, VUG has provided higher returns than ITOT over the past ten years.
In this article, we’ll compare VUG vs. ITOT. 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 ITOT’s risk metrics, industry exposure, and performance and examine how these affect their overall returns.
|Name||Vanguard Growth Index Fund ETF Shares||iShares Core S&P Total U.S. Stock Market ETF|
|Category||Large Growth||Large Blend|
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 Core S&P Total U.S. Stock Market ETF (ITOT) is a Large Blend fund that is issued by iShares. It currently has 41.97B total assets under management and has yielded an average annual return of 14.59% over the past 10 years. The fund has a dividend yield of 1.2% with an expense ratio of 0.03%.
VUG’s dividend yield is 0.63% lower than that of ITOT (0.57% vs. 1.2%). Also, VUG yielded on average 2.99% more per year over the past decade (17.58% vs. 14.59%). The expense ratio of VUG is 0.01 percentage points higher than ITOT’s (0.04% vs. 0.03%).
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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 Core S&P Total U.S. Stock Market ETF (ITOT) has the most exposure to the Technology sector at 24.49%. This is followed by Financial Services and Healthcare at 13.69% and 13.59% respectively. Basic Materials (2.47%), Energy (2.51%), and Real Estate (3.67%) only make up 8.65% of the fund’s total assets.
ITOT’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.79%, 9.21%, 10.54%, 11.69%, and 13.59%.
VUG is 14.56% more exposed to the Technology sector than ITOT (39.05% vs 24.49%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 6.09% higher and 5.95% higher respectively (17.78% vs. 11.69% and 16.49% vs. 10.54%). In total, Energy, Basic Materials, and Consumer Defensive also make up 6.52% less of the fund’s holdings compared to ITOT (4.25% vs. 10.77%).
|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 Class A||1.89%|
|Alphabet Inc Class A||1.79%|
|Alphabet Inc Class C||1.71%|
|Berkshire Hathaway Inc Class B||1.17%|
|JPMorgan Chase & Co||1.02%|
ITOT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.07%, 4.75%, 3.16%, 1.89%, and 1.79%.
Alphabet Inc Class C (1.71%), Tesla Inc (1.17%), and Berkshire Hathaway Inc Class B (1.17%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ITOT’s holdings at 1.08% and 1.02%.
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The Vanguard Growth Index Fund ETF Shares (VUG) has a Mean Return of 1.44 with a R-squared of 92.48 and a Sharpe Ratio of 1.13. Its Treynor Ratio is 16.13 while VUG’s Standard Deviation is 14.76. Furthermore, the fund has a Alpha of 1.81 and a Beta of 1.04.
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a Mean Return of 1.27 with a Beta of 1.03 and a Sharpe Ratio of 1.04. Its Treynor Ratio is 14.13 while ITOT’s Standard Deviation is 14.02. Furthermore, the fund has a R-squared of 99.4 and a Alpha of -0.54.
VUG’s Mean Return is 0.17 points higher than that of ITOT and its R-squared is 6.92 points lower. With a Standard Deviation of 14.76, VUG is slightly more volatile than ITOT. The Alpha and Beta of VUG are 2.35 points higher and 0.01 points higher than ITOT’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 2013 was the strongest year for ITOT, returning 32.67% on an annual basis. The poorest year for ITOT in the last ten years was 2018, with a yield of -5.27%. Most years the iShares Core S&P Total U.S. Stock Market ETF has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 13.01%, 15.98%, and 16.15% 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 ITOT, the end total would have been $42,310. This equates to a $32,310 profit over 11 years and a compound annual growth rate (CAGR) of 14.59%.
VUG’s CAGR is 2.99 percentage points higher than that of ITOT and as a result, would have yielded $12,425 more on a $10,000 investment. Thus, VUG outperformed ITOT by 2.99% annually.
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