VUG vs. VGT: What’s The Difference?

The Vanguard Growth Index Fund ETF Shares (VUG) and the Vanguard Information Technology Index Fund ETF Shares (VGT) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and VGT is a Vanguard Technology fund. So, what’s the difference between VUG and VGT? And which fund is better?

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

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

Summary

VUG VGT
Name Vanguard Growth Index Fund ETF Shares Vanguard Information Technology Index Fund ETF Shares
Category Large Growth Technology
Issuer Vanguard Vanguard
AUM 165.53B 54.13B
Avg. Return 17.58% 20.84%
Div. Yield 0.57% 0.66%
Expense Ratio 0.04% 0.1%

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 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%.

VUG’s dividend yield is 0.09% lower than that of VGT (0.57% vs. 0.66%). Also, VUG yielded on average 3.26% less per year over the past decade (17.58% vs. 20.84%). The expense ratio of VUG is 0.06 percentage points lower than VGT’s (0.04% vs. 0.1%).

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Fund Composition

Industry Exposure

VUG vs. VGT - Industry Exposure

VUG VGT
Technology 39.05% 88.89%
Industrials 5.13% 1.67%
Energy 0.32% 0.0%
Communication Services 16.49% 0.61%
Utilities 0.0% 0.0%
Healthcare 8.09% 0.0%
Consumer Defensive 2.41% 0.0%
Real Estate 2.46% 0.0%
Financial Services 6.75% 8.83%
Consumer Cyclical 17.78% 0.0%
Basic Materials 1.52% 0.0%

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 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%.

VUG is 49.84% less exposed to the Technology sector than VGT (39.05% vs 88.89%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 17.78% higher and 15.88% higher respectively (17.78% vs. 0.0% and 16.49% vs. 0.61%). In total, Energy, Basic Materials, and Consumer Defensive also make up 4.25% more of the fund’s holdings compared to VGT (4.25% vs. 0.00%).

Holdings

VUG - Holdings

VUG Holdings Weight
Apple Inc 10.13%
Microsoft Corp 9.52%
Amazon.com Inc 6.88%
Facebook Inc Class A 3.89%
Alphabet Inc Class A 3.43%
Alphabet Inc Class C 3.22%
Tesla Inc 2.44%
NVIDIA Corp 2.21%
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%.

VGT - Holdings

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%.

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Risk Analysis

VUG VGT
Mean Return 1.44 1.76
R-squared 92.48 74.84
Std. Deviation 14.76 16.61
Alpha 1.81 10.41
Beta 1.04 1.02
Sharpe Ratio 1.13 1.23
Treynor Ratio 16.13 20.55

The Vanguard Growth Index Fund ETF Shares (VUG) has a R-squared of 92.48 with a Alpha of 1.81 and a Treynor Ratio of 16.13. Its Beta is 1.04 while VUG’s Sharpe Ratio is 1.13. Furthermore, the fund has a Standard Deviation of 14.76 and a Mean Return of 1.44.

The Vanguard Information Technology Index Fund ETF Shares (VGT) has a R-squared of 74.84 with a Beta of 1.02 and a Treynor Ratio of 20.55. Its Standard Deviation is 16.61 while VGT’s Sharpe Ratio is 1.23. Furthermore, the fund has a Alpha of 10.41 and a Mean Return of 1.76.

VUG’s Mean Return is 0.32 points lower than that of VGT and its R-squared is 17.64 points higher. With a Standard Deviation of 14.76, VUG is slightly less volatile than VGT. The Alpha and Beta of VUG are 8.60 points lower and 0.02 points higher than VGT’s Alpha and Beta.

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Performance

Annual Returns

VUG vs. VGT - Annual Returns

Year VUG VGT
2020 40.16% 45.94%
2019 37.26% 48.68%
2018 -3.32% 2.52%
2017 27.8% 37.07%
2016 6.13% 13.73%
2015 3.32% 5.02%
2014 13.62% 18.01%
2013 32.38% 30.91%
2012 17.03% 14.05%
2011 1.87% 0.52%
2010 17.11% 12.74%

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 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

VUG vs. VGT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VUG $10,000 $54,735 17.58%
VGT $10,000 $72,718 20.84%

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 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%.

VUG’s CAGR is 3.26 percentage points lower than that of VGT and as a result, would have yielded $17,983 less on a $10,000 investment. Thus, VUG performed worse than VGT by 3.26% annually.


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