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BSV vs. DGRO: What’s The Difference?

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the iShares Core Dividend Growth ETF (DGRO) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and DGRO is a iShares Large Value fund. So, what’s the difference between BSV and DGRO? And which fund is better?

The expense ratio of BSV is 0.03 percentage points lower than DGRO’s (0.05% vs. 0.08%). BSV is mostly comprised of AAA bonds while DGRO has a high exposure to the technology sector. Overall, BSV has provided lower returns than DGRO over the past ten years.

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

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Summary

BSVDGRO
NameVanguard Short-Term Bond Index Fund ETF SharesiShares Core Dividend Growth ETF
CategoryShort-Term BondLarge Value
IssuerVanguardiShares
AUM67.71B20B
Avg. Return2.27%12.46%
Div. Yield1.48%2.04%
Expense Ratio0.05%0.08%

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) is a Short-Term Bond fund that is issued by Vanguard. It currently has 67.71B total assets under management and has yielded an average annual return of 2.27% over the past 10 years. The fund has a dividend yield of 1.48% with an expense ratio of 0.05%.

The iShares Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.

BSV’s dividend yield is 0.56% lower than that of DGRO (1.48% vs. 2.04%). Also, BSV yielded on average 10.19% less per year over the past decade (2.27% vs. 12.46%). The expense ratio of BSV is 0.03 percentage points lower than DGRO’s (0.05% vs. 0.08%).

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Fund Composition

Holdings

BSV - Holdings

BSV Bond SectorsWeight
AAA71.65%
BBB13.08%
A11.95%
AA3.28%
Others0.03%
Below B0.01%
B0.0%
BB0.0%
US Government0.0%

BSV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 71.65%, 13.08%, 11.95%, 3.28%, and 0.03%. The fund is less weighted towards Below B (0.01%), B (0.0%), and BB (0.0%) rated bonds.

DGRO - Holdings

DGRO HoldingsWeight
Microsoft Corp3.29%
Apple Inc3.26%
Pfizer Inc2.89%
Johnson & Johnson2.87%
Procter & Gamble Co2.79%
Verizon Communications Inc2.68%
JPMorgan Chase & Co2.57%
The Home Depot Inc2.35%
Merck & Co Inc2.11%
Cisco Systems Inc1.98%

DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.

Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.

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Risk Analysis

BSVDGRO
Mean Return0.160
R-squared78.380
Std. Deviation1.330
Alpha0.210
Beta0.380
Sharpe Ratio0.980
Treynor Ratio3.330

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Beta of 0.38 with a Treynor Ratio of 3.33 and a Sharpe Ratio of 0.98. Its Standard Deviation is 1.33 while BSV’s Mean Return is 0.16. Furthermore, the fund has a R-squared of 78.38 and a Alpha of 0.21.

The iShares Core Dividend Growth ETF (DGRO) has a R-squared of 0 with a Standard Deviation of 0 and a Sharpe Ratio of 0. Its Alpha is 0 while DGRO’s Beta is 0. Furthermore, the fund has a Mean Return of 0 and a Treynor Ratio of 0.

BSV’s Mean Return is 0.16 points higher than that of DGRO and its R-squared is 78.38 points higher. With a Standard Deviation of 1.33, BSV is slightly more volatile than DGRO. The Alpha and Beta of BSV are 0.21 points higher and 0.38 points higher than DGRO’s Alpha and Beta.

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Performance

Annual Returns

BSV vs. DGRO - Annual Returns

YearBSVDGRO
20204.67%9.47%
20194.92%30.02%
20181.34%-2.24%
20171.2%22.84%
20161.42%15.27%
20150.92%-0.62%
20141.32%0.0%
20130.17%0.0%
20121.98%0.0%
20113.04%0.0%
20104.0%0.0%

BSV had its best year in 2019 with an annual return of 4.92%. BSV’s worst year over the past decade yielded 0.17% and occurred in 2013. In most years the Vanguard Short-Term Bond Index Fund ETF Shares provided moderate returns such as in 2018, 2016, and 2012 where annual returns amounted to 1.34%, 1.42%, and 1.98% respectively.

The year 2019 was the strongest year for DGRO, returning 30.02% on an annual basis. The poorest year for DGRO in the last ten years was 2018, with a yield of -2.24%. Most years the iShares Core Dividend Growth ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

BSV vs. DGRO - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
BSV$10,000$11,5272.27%
DGRO$10,000$19,58012.46%

A $10,000 investment in BSV would have resulted in a final balance of $11,527. This is a profit of $1,527 over 6 years and amounts to a compound annual growth rate (CAGR) of 2.27%.

With a $10,000 investment in DGRO, the end total would have been $19,580. This equates to a $9,580 profit over 6 years and a compound annual growth rate (CAGR) of 12.46%.

BSV’s CAGR is 10.19 percentage points lower than that of DGRO and as a result, would have yielded $8,053 less on a $10,000 investment. Thus, BSV performed worse than DGRO by 10.19% annually.


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