The Vanguard Growth Index Fund ETF Shares (VUG) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between VUG and VTIP? And which fund is better?
The expense ratio of VUG is 0.01 percentage points lower than VTIP’s (0.04% vs. 0.05%). VUG also has a high exposure to the technology sector while VTIP is mostly comprised of AAA bonds. Overall, VUG has provided higher returns than VTIP over the past ten years.
In this article, we’ll compare VUG vs. VTIP. We’ll look at risk metrics and holdings, as well as at their portfolio growth and fund composition. Moreover, I’ll also discuss VUG’s and VTIP’s performance, annual returns, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Growth Index Fund ETF Shares||Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares|
|Category||Large Growth||Inflation-Protected Bond|
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 Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.
VUG’s dividend yield is 0.78% lower than that of VTIP (0.57% vs. 1.35%). Also, VUG yielded on average 15.79% more per year over the past decade (17.58% vs. 1.79%). The expense ratio of VUG is 0.01 percentage points lower than VTIP’s (0.04% vs. 0.05%).
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|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%.
|VTIP Bond Sectors||Weight|
VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
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The Vanguard Growth Index Fund ETF Shares (VUG) has a Mean Return of 1.44 with a Treynor Ratio of 16.13 and a R-squared of 92.48. Its Alpha is 1.81 while VUG’s Beta is 1.04. Furthermore, the fund has a Standard Deviation of 14.76 and a Sharpe Ratio of 1.13.
The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Sharpe Ratio of 0 with a Standard Deviation of 0 and a Beta of 0. Its Treynor Ratio is 0 while VTIP’s Alpha is 0. Furthermore, the fund has a Mean Return of 0 and a R-squared of 0.
VUG’s Mean Return is 1.44 points higher than that of VTIP and its R-squared is 92.48 points higher. With a Standard Deviation of 14.76, VUG is slightly more volatile than VTIP. The Alpha and Beta of VUG are 1.81 points higher and 1.04 points higher than VTIP’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 2020 was the strongest year for VTIP, returning 4.97% on an annual basis. The poorest year for VTIP in the last ten years was 2013, with a yield of -1.55%. Most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 0.54% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VUG would have resulted in a final balance of $29,615. This is a profit of $19,615 over 7 years and amounts to a compound annual growth rate (CAGR) of 17.58%.
With a $10,000 investment in VTIP, the end total would have been $11,305. This equates to a $1,305 profit over 7 years and a compound annual growth rate (CAGR) of 1.79%.
VUG’s CAGR is 15.79 percentage points higher than that of VTIP and as a result, would have yielded $18,310 more on a $10,000 investment. Thus, VUG outperformed VTIP by 15.79% annually.
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