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.
Summary
| VXF | TLT | |
| Name | Vanguard Extended Market Index Fund ETF Shares | iShares 20+ Year Treasury Bond ETF |
| Category | Mid-Cap Growth | Long Government |
| Issuer | Vanguard | iShares |
| AUM | 114.53B | 15.15B |
| Avg. Return | 15.47% | 9.00% |
| Div. Yield | 1.19% | 1.5% |
| Expense Ratio | 0.06% | 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%).
Fund Composition
Holdings
| VXF Holdings | Weight |
| Square Inc A | 1.2% |
| Zoom Video Communications Inc | 1.04% |
| Uber Technologies Inc | 0.93% |
| Moderna Inc | 0.9% |
| Blackstone Group Inc | 0.83% |
| Snap Inc Class A | 0.8% |
| Twilio Inc A | 0.73% |
| DocuSign Inc | 0.68% |
| CrowdStrike Holdings Inc Class A | 0.63% |
| Marvell Technology Inc | 0.6% |
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 Bond Sectors | Weight |
| AAA | 100.0% |
| Others | 0.0% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
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.
Risk Analysis
| VXF | TLT | |
| Mean Return | 1.24 | 0.63 |
| R-squared | 85.73 | 68.76 |
| Std. Deviation | 18.04 | 12.76 |
| Alpha | -3.26 | -2.83 |
| Beta | 1.23 | 3.54 |
| Sharpe Ratio | 0.79 | 0.55 |
| Treynor Ratio | 10.92 | 1.82 |
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.
Performance
Annual Returns
| Year | VXF | TLT |
| 2020 | 32.19% | 17.92% |
| 2019 | 28.04% | 14.93% |
| 2018 | -9.37% | -2.07% |
| 2017 | 18.1% | 8.92% |
| 2016 | 16.16% | 1.36% |
| 2015 | -3.26% | -1.65% |
| 2014 | 7.55% | 27.35% |
| 2013 | 38.37% | -13.91% |
| 2012 | 18.48% | 3.25% |
| 2011 | -3.61% | 33.6% |
| 2010 | 27.55% | 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
| Fund | Initial Balance | Final Balance | CAGR |
| VXF | $10,000 | $44,130 | 15.47% |
| TLT | $10,000 | $23,809 | 9.00% |
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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