VXF vs. VTIP: What’s The Difference?

The Vanguard Extended Market Index Fund ETF Shares (VXF) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. VXF is a Vanguard Mid-Cap Growth fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between VXF and VTIP? And which fund is better?

The expense ratio of VXF is 0.01 percentage points higher than VTIP’s (0.06% vs. 0.05%). VXF also has a high exposure to the technology sector while VTIP is mostly comprised of AAA bonds. Overall, VXF has provided higher returns than VTIP over the past 7 years.

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

Summary

VXF VTIP
Name Vanguard Extended Market Index Fund ETF Shares Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares
Category Mid-Cap Growth Inflation-Protected Bond
Issuer Vanguard Vanguard
AUM 114.53B 50.67B
Avg. Return 15.47% 1.79%
Div. Yield 1.19% 1.35%
Expense Ratio 0.06% 0.05%

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 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%.

VXF’s dividend yield is 0.16% lower than that of VTIP (1.19% vs. 1.35%). Also, VXF yielded on average 13.68% more per year over the past decade (15.47% vs. 1.79%). The expense ratio of VXF is 0.01 percentage points higher than VTIP’s (0.06% vs. 0.05%).

Fund Composition

Holdings

VXF - 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%.

VTIP - Holdings

VTIP Bond Sectors Weight
AAA 99.87%
Others 0.13%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

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.

Risk Analysis

VXF VTIP
Mean Return 1.24 0
R-squared 85.73 0
Std. Deviation 18.04 0
Alpha -3.26 0
Beta 1.23 0
Sharpe Ratio 0.79 0
Treynor Ratio 10.92 0

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

The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a R-squared of 0 with a Treynor Ratio of 0 and a Standard Deviation of 0. Its Sharpe Ratio is 0 while VTIP’s Mean Return is 0. Furthermore, the fund has a Beta of 0 and a Alpha of 0.

VXF’s Mean Return is 1.24 points higher than that of VTIP and its R-squared is 85.73 points higher. With a Standard Deviation of 18.04, VXF is slightly more volatile than VTIP. The Alpha and Beta of VXF are 3.26 points lower and 1.23 points higher than VTIP’s Alpha and Beta.

Performance

Annual Returns

VXF vs. VTIP - Annual Returns

Year VXF VTIP
2020 32.19% 4.97%
2019 28.04% 4.83%
2018 -9.37% 0.54%
2017 18.1% 0.82%
2016 16.16% 2.71%
2015 -3.26% -0.15%
2014 7.55% -1.17%
2013 38.37% -1.55%
2012 18.48% 0.0%
2011 -3.61% 0.0%
2010 27.55% 0.0%

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 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.

Portfolio Growth

VXF vs. VTIP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VXF $10,000 $21,894 15.47%
VTIP $10,000 $11,305 1.79%

A $10,000 investment in VXF would have resulted in a final balance of $21,894. This is a profit of $11,894 over 7 years and amounts to a compound annual growth rate (CAGR) of 15.47%.

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%.

VXF’s CAGR is 13.68 percentage points higher than that of VTIP and as a result, would have yielded $10,589 more on a $10,000 investment. Thus, VXF outperformed VTIP by 13.68% 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) 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!

2) 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!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

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

Leave a Reply