Skip to content

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.

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

VUGVGT
NameVanguard Growth Index Fund ETF SharesVanguard Information Technology Index Fund ETF Shares
CategoryLarge GrowthTechnology
IssuerVanguardVanguard
AUM165.53B54.13B
Avg. Return17.58%20.84%
Div. Yield0.57%0.66%
Expense Ratio0.04%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%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

VUG vs. VGT - Industry Exposure

VUGVGT
Technology39.05%88.89%
Industrials5.13%1.67%
Energy0.32%0.0%
Communication Services16.49%0.61%
Utilities0.0%0.0%
Healthcare8.09%0.0%
Consumer Defensive2.41%0.0%
Real Estate2.46%0.0%
Financial Services6.75%8.83%
Consumer Cyclical17.78%0.0%
Basic Materials1.52%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 HoldingsWeight
Apple Inc10.13%
Microsoft Corp9.52%
Amazon.com Inc6.88%
Facebook Inc Class A3.89%
Alphabet Inc Class A3.43%
Alphabet Inc Class C3.22%
Tesla Inc2.44%
NVIDIA Corp2.21%
Visa Inc Class A1.78%
PayPal Holdings Inc1.6%

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 HoldingsWeight
Apple Inc19.58%
Microsoft Corp16.53%
NVIDIA Corp4.22%
Visa Inc Class A3.16%
PayPal Holdings Inc2.76%
Mastercard Inc Class A2.76%
Adobe Inc2.39%
Intel Corp1.94%
Salesforce.com Inc1.91%
Cisco Systems Inc1.9%

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%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

VUGVGT
Mean Return1.441.76
R-squared92.4874.84
Std. Deviation14.7616.61
Alpha1.8110.41
Beta1.041.02
Sharpe Ratio1.131.23
Treynor Ratio16.1320.55

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.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

VUG vs. VGT - Annual Returns

YearVUGVGT
202040.16%45.94%
201937.26%48.68%
2018-3.32%2.52%
201727.8%37.07%
20166.13%13.73%
20153.32%5.02%
201413.62%18.01%
201332.38%30.91%
201217.03%14.05%
20111.87%0.52%
201017.11%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

FundInitial BalanceFinal BalanceCAGR
VUG$10,000$54,73517.58%
VGT$10,000$72,71820.84%

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.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply

Your email address will not be published.