The Vanguard Total International Stock Index Fund ETF Shares (VXUS) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. VXUS is a Vanguard Foreign Large Blend fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between VXUS and GOVT? And which fund is better?
The expense ratio of VXUS is 0.03 percentage points higher than GOVT’s (0.08% vs. 0.05%). VXUS also has a high exposure to the financial services sector while GOVT is mostly comprised of AAA bonds. Overall, VXUS has provided higher returns than GOVT over the past ten years.
In this article, we’ll compare VXUS vs. GOVT. We’ll look at portfolio growth and fund composition, as well as at their annual returns and performance. Moreover, I’ll also discuss VXUS’s and GOVT’s industry exposure, holdings, and risk metrics and examine how these affect their overall returns.
|Name||Vanguard Total International Stock Index Fund ETF Shares||iShares U.S. Treasury Bond ETF|
|Category||Foreign Large Blend||Intermediate Government|
The Vanguard Total International Stock Index Fund ETF Shares (VXUS) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 404.73B total assets under management and has yielded an average annual return of 8.41% over the past 10 years. The fund has a dividend yield of 2.44% with an expense ratio of 0.08%.
The iShares U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.
VXUS’s dividend yield is 1.44% higher than that of GOVT (2.44% vs. 1.0%). Also, VXUS yielded on average 5.73% more per year over the past decade (8.41% vs. 2.67%). The expense ratio of VXUS is 0.03 percentage points higher than GOVT’s (0.08% vs. 0.05%).
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|Taiwan Semiconductor Manufacturing Co Ltd||1.62%|
|Tencent Holdings Ltd||1.41%|
|Alibaba Group Holding Ltd Ordinary Shares||1.26%|
|Samsung Electronics Co Ltd||1.05%|
|ASML Holding NV||0.86%|
|Roche Holding AG||0.81%|
|Toyota Motor Corp||0.67%|
|LVMH Moet Hennessy Louis Vuitton SE||0.61%|
VXUS’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, and Samsung Electronics Co Ltd at 1.62%, 1.41%, 1.26%, 1.1%, and 1.05%.
ASML Holding NV (0.86%), Roche Holding AG (0.81%), and Toyota Motor Corp (0.67%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VXUS’s holdings at 0.61% and 0.6%.
|GOVT Bond Sectors||Weight|
GOVT’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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The Vanguard Total International Stock Index Fund ETF Shares (VXUS) has a Standard Deviation of 15.12 with a R-squared of 98.39 and a Mean Return of 0.56. Its Sharpe Ratio is 0.4 while VXUS’s Treynor Ratio is 5.14. Furthermore, the fund has a Alpha of 0.31 and a Beta of 0.99.
The iShares U.S. Treasury Bond ETF (GOVT) has a Alpha of 0 with a R-squared of 0 and a Sharpe Ratio of 0. Its Mean Return is 0 while GOVT’s Standard Deviation is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Beta of 0.
VXUS’s Mean Return is 0.56 points higher than that of GOVT and its R-squared is 98.39 points higher. With a Standard Deviation of 15.12, VXUS is slightly more volatile than GOVT. The Alpha and Beta of VXUS are 0.31 points higher and 0.99 points higher than GOVT’s Alpha and Beta.
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VXUS had its best year in 2017 with an annual return of 27.52%. VXUS’s worst year over the past decade yielded -14.42% and occurred in 2018. In most years the Vanguard Total International Stock Index Fund ETF Shares provided moderate returns such as in 2010, 2016, and 2020 where annual returns amounted to 0.0%, 4.72%, and 11.32% respectively.
The year 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VXUS would have resulted in a final balance of $16,338. This is a profit of $6,338 over 8 years and amounts to a compound annual growth rate (CAGR) of 8.41%.
With a $10,000 investment in GOVT, the end total would have been $12,297. This equates to a $2,297 profit over 8 years and a compound annual growth rate (CAGR) of 2.67%.
VXUS’s CAGR is 5.73 percentage points higher than that of GOVT and as a result, would have yielded $4,041 more on a $10,000 investment. Thus, VXUS outperformed GOVT by 5.73% annually.
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