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VXF vs. TLT: What’s The Difference?

The Vanguard Extended Market Index Fund ETF Shares (VXF) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. VXF is a Vanguard Mid-Cap Growth fund and TLT is a iShares Long Government fund. So, what’s the difference between VXF and TLT? And which fund is better?

The expense ratio of VXF is 0.09 percentage points lower than TLT’s (0.06% vs. 0.15%). VXF also has a high exposure to the technology sector while TLT is mostly comprised of AAA bonds. Overall, VXF has provided higher returns than TLT over the past 11 years.

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

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Summary

VXFTLT
NameVanguard Extended Market Index Fund ETF SharesiShares 20+ Year Treasury Bond ETF
CategoryMid-Cap GrowthLong Government
IssuerVanguardiShares
AUM114.53B15.15B
Avg. Return15.47%9.00%
Div. Yield1.19%1.5%
Expense Ratio0.06%0.15%

The Vanguard Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.

The iShares 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.

VXF’s dividend yield is 0.31% lower than that of TLT (1.19% vs. 1.5%). Also, VXF yielded on average 6.48% more per year over the past decade (15.47% vs. 9.00%). The expense ratio of VXF is 0.09 percentage points lower than TLT’s (0.06% vs. 0.15%).

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Fund Composition

Holdings

VXF - Holdings

VXF HoldingsWeight
Square Inc A1.2%
Zoom Video Communications Inc1.04%
Uber Technologies Inc0.93%
Moderna Inc0.9%
Blackstone Group Inc0.83%
Snap Inc Class A0.8%
Twilio Inc A0.73%
DocuSign Inc0.68%
CrowdStrike Holdings Inc Class A0.63%
Marvell Technology Inc0.6%

VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.

Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.

TLT - Holdings

TLT Bond SectorsWeight
AAA100.0%
Others0.0%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

TLT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 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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Risk Analysis

VXFTLT
Mean Return1.240.63
R-squared85.7368.76
Std. Deviation18.0412.76
Alpha-3.26-2.83
Beta1.233.54
Sharpe Ratio0.790.55
Treynor Ratio10.921.82

The Vanguard Extended Market Index Fund ETF Shares (VXF) has a Sharpe Ratio of 0.79 with a Alpha of -3.26 and a Treynor Ratio of 10.92. Its Beta is 1.23 while VXF’s R-squared is 85.73. Furthermore, the fund has a Mean Return of 1.24 and a Standard Deviation of 18.04.

The iShares 20+ Year Treasury Bond ETF (TLT) has a Sharpe Ratio of 0.55 with a Standard Deviation of 12.76 and a Treynor Ratio of 1.82. Its Beta is 3.54 while TLT’s Mean Return is 0.63. Furthermore, the fund has a R-squared of 68.76 and a Alpha of -2.83.

VXF’s Mean Return is 0.61 points higher than that of TLT and its R-squared is 16.97 points higher. With a Standard Deviation of 18.04, VXF is slightly more volatile than TLT. The Alpha and Beta of VXF are 0.43 points lower and 2.31 points lower than TLT’s Alpha and Beta.

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Performance

Annual Returns

VXF vs. TLT - Annual Returns

YearVXFTLT
202032.19%17.92%
201928.04%14.93%
2018-9.37%-2.07%
201718.1%8.92%
201616.16%1.36%
2015-3.26%-1.65%
20147.55%27.35%
201338.37%-13.91%
201218.48%3.25%
2011-3.61%33.6%
201027.55%9.25%

VXF had its best year in 2013 with an annual return of 38.37%. VXF’s worst year over the past decade yielded -9.37% and occurred in 2018. In most years the Vanguard Extended Market Index Fund ETF Shares provided moderate returns such as in 2016, 2017, and 2012 where annual returns amounted to 16.16%, 18.1%, and 18.48% respectively.

The year 2011 was the strongest year for TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% respectively.

Portfolio Growth

VXF vs. TLT - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VXF$10,000$44,13015.47%
TLT$10,000$23,8099.00%

A $10,000 investment in VXF would have resulted in a final balance of $44,130. This is a profit of $34,130 over 11 years and amounts to a compound annual growth rate (CAGR) of 15.47%.

With a $10,000 investment in TLT, the end total would have been $23,809. This equates to a $13,809 profit over 11 years and a compound annual growth rate (CAGR) of 9.00%.

VXF’s CAGR is 6.48 percentage points higher than that of TLT and as a result, would have yielded $20,321 more on a $10,000 investment. Thus, VXF outperformed TLT by 6.48% annually.


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