The Vanguard Total International Stock Index Fund ETF Shares (VXUS) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. VXUS is a Vanguard Foreign Large Blend fund and TLT is a iShares Long Government fund. So, what’s the difference between VXUS and TLT? And which fund is better?
The expense ratio of VXUS is 0.07 percentage points lower than TLT’s (0.08% vs. 0.15%). VXUS also has a high exposure to the financial services sector while TLT is mostly comprised of AAA bonds. Overall, VXUS has provided lower returns than TLT over the past ten years.
In this article, we’ll compare VXUS vs. TLT. We’ll look at annual returns and risk metrics, as well as at their holdings and fund composition. Moreover, I’ll also discuss VXUS’s and TLT’s portfolio growth, industry exposure, and performance and examine how these affect their overall returns.
|NameVanguard Total International Stock Index Fund ETF SharesiShares 20+ Year Treasury Bond ETF|
|Category||Foreign Large Blend||Long 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 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%.
VXUS’s dividend yield is 0.94% higher than that of TLT (2.44% vs. 1.5%). Also, VXUS yielded on average 0.59% less per year over the past decade (8.41% vs. 9.00%). The expense ratio of VXUS is 0.07 percentage points lower than TLT’s (0.08% vs. 0.15%).
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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%.
|TLT Bond Sectors||Weight|
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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The Vanguard Total International Stock Index Fund ETF Shares (VXUS) has a Mean Return of 0.56 with a Beta of 0.99 and a Alpha of 0.31. Its Sharpe Ratio is 0.4 while VXUS’s Standard Deviation is 15.12. Furthermore, the fund has a R-squared of 98.39 and a Treynor Ratio of 5.14.
The iShares 20+ Year Treasury Bond ETF (TLT) has a Sharpe Ratio of 0.55 with a Beta of 3.54 and a Treynor Ratio of 1.82. Its Alpha is -2.83 while TLT’s R-squared is 68.76. Furthermore, the fund has a Mean Return of 0.63 and a Standard Deviation of 12.76.
VXUS’s Mean Return is 0.07 points lower than that of TLT and its R-squared is 29.63 points higher. With a Standard Deviation of 15.12, VXUS is slightly more volatile than TLT. The Alpha and Beta of VXUS are 3.14 points higher and 2.55 points lower than TLT’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 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VXUS would have resulted in a final balance of $19,315. This is a profit of $9,315 over 9 years and amounts to a compound annual growth rate (CAGR) of 8.41%.
With a $10,000 investment in TLT, the end total would have been $16,312. This equates to a $6,312 profit over 9 years and a compound annual growth rate (CAGR) of 9.00%.
VXUS’s CAGR is 0.59 percentage points lower than that of TLT and as a result, would have yielded $3,003 more on a $10,000 investment. Thus, VXUS performed worse than TLT by 0.59% annually.
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