The Vanguard Growth Index Fund ETF Shares (VUG) and the Vanguard Total World Stock Index Fund ETF Shares (VT) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and VT is a Vanguard N/A fund. So, what’s the difference between VUG and VT? And which fund is better?
The expense ratio of VUG is 0.04 percentage points lower than VT’s (0.04% vs. 0.08%). VUG also has a higher exposure to the technology sector and a higher standard deviation. Overall, VUG has provided higher returns than VT over the past ten years.
In this article, we’ll compare VUG vs. VT. We’ll look at portfolio growth and holdings, as well as at their industry exposure and annual returns. Moreover, I’ll also discuss VUG’s and VT’s performance, fund composition, and risk metrics and examine how these affect their overall returns.
|Name||Vanguard Growth Index Fund ETF Shares||Vanguard Total World Stock Index Fund ETF Shares|
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 Total World Stock Index Fund ETF Shares (VT) is a N/A fund that is issued by Vanguard. It currently has 30.44B total assets under management and has yielded an average annual return of 10.42% over the past 10 years. The fund has a dividend yield of 1.65% with an expense ratio of 0.08%.
VUG’s dividend yield is 1.08% lower than that of VT (0.57% vs. 1.65%). Also, VUG yielded on average 7.16% more per year over the past decade (17.58% vs. 10.42%). The expense ratio of VUG is 0.04 percentage points lower than VT’s (0.04% vs. 0.08%).
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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 Vanguard Total World Stock Index Fund ETF Shares (VT) has the most exposure to the Technology sector at 19.63%. This is followed by Financial Services and Consumer Cyclical at 15.36% and 12.32% respectively. Energy (3.48%), Real Estate (3.64%), and Basic Materials (4.97%) only make up 12.09% of the fund’s total assets.
VT’s mid-section with moderate exposure is comprised of Consumer Defensive, Communication Services, Industrials, Healthcare, and Consumer Cyclical stocks at 6.71%, 9.02%, 10.7%, 11.58%, and 12.32%.
VUG is 19.42% more exposed to the Technology sector than VT (39.05% vs 19.63%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 5.46% higher and 7.47% higher respectively (17.78% vs. 12.32% and 16.49% vs. 9.02%). In total, Energy, Basic Materials, and Consumer Defensive also make up 10.91% less of the fund’s holdings compared to VT (4.25% vs. 15.16%).
|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||1.1%|
|Alphabet Inc Class A||0.97%|
|Alphabet Inc Class C||0.95%|
|JPMorgan Chase & Co||0.62%|
|Tencent Holdings Ltd||0.6%|
VT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 2.85%, 2.71%, 1.98%, 1.1%, and 0.97%.
Alphabet Inc Class C (0.95%), Tesla Inc (0.7%), and NVIDIA Corp (0.64%) have a slightly smaller but still significant weight. JPMorgan Chase & Co and Tencent Holdings Ltd are also represented in the VT’s holdings at 0.62% and 0.6%.
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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 Alpha of 1.81. Its R-squared is 92.48 while VUG’s Mean Return is 1.44. Furthermore, the fund has a Sharpe Ratio of 1.13 and a Standard Deviation of 14.76.
The Vanguard Total World Stock Index Fund ETF Shares (VT) has a Treynor Ratio of 9.5 with a Beta of 1.01 and a Mean Return of 0.9. Its R-squared is 99.35 while VT’s Standard Deviation is 14.19. Furthermore, the fund has a Alpha of 0.2 and a Sharpe Ratio of 0.71.
VUG’s Mean Return is 0.54 points higher than that of VT and its R-squared is 6.87 points lower. With a Standard Deviation of 14.76, VUG is slightly more volatile than VT. The Alpha and Beta of VUG are 1.61 points higher and 0.03 points higher than VT’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 VT, returning 26.8% on an annual basis. The poorest year for VT in the last ten years was 2018, with a yield of -9.67%. Most years the Vanguard Total World Stock Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 8.77%, 13.05%, and 16.74% 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 VT, the end total would have been $27,739. This equates to a $17,739 profit over 11 years and a compound annual growth rate (CAGR) of 10.42%.
VUG’s CAGR is 7.16 percentage points higher than that of VT and as a result, would have yielded $26,996 more on a $10,000 investment. Thus, VUG outperformed VT by 7.16% annually.
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