The iShares Core Dividend Growth ETF (DGRO) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. DGRO is a iShares Large Value fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between DGRO and VBK? And which fund is better?
The expense ratio of DGRO is 0.01 percentage points higher than VBK’s (0.08% vs. 0.07%). DGRO also has a lower exposure to the technology sector and a lower standard deviation. Overall, DGRO has provided lower returns than VBK over the past 6 years.
In this article, we’ll compare DGRO vs. VBK. We’ll look at holdings and risk metrics, as well as at their fund composition and portfolio growth. Moreover, I’ll also discuss DGRO’s and VBK’s industry exposure, performance, and annual returns and examine how these affect their overall returns.
Summary
| DGRO | VBK | |
| Name | iShares Core Dividend Growth ETF | Vanguard Small-Cap Growth Index Fund ETF Shares |
| Category | Large Value | Small Growth |
| Issuer | iShares | Vanguard |
| AUM | 20B | 37.89B |
| Avg. Return | 12.46% | 16.53% |
| Div. Yield | 2.04% | 0.45% |
| Expense Ratio | 0.08% | 0.07% |
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%.
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.
DGRO’s dividend yield is 1.59% higher than that of VBK (2.04% vs. 0.45%). Also, DGRO yielded on average 4.07% less per year over the past decade (12.46% vs. 16.53%). The expense ratio of DGRO is 0.01 percentage points higher than VBK’s (0.08% vs. 0.07%).
Fund Composition
Industry Exposure
| DGRO | VBK | |
| Technology | 18.98% | 27.87% |
| Industrials | 12.52% | 13.19% |
| Energy | 0.11% | 1.77% |
| Communication Services | 4.53% | 3.24% |
| Utilities | 7.34% | 0.32% |
| Healthcare | 17.55% | 23.24% |
| Consumer Defensive | 10.24% | 3.83% |
| Real Estate | 0.0% | 7.87% |
| Financial Services | 18.47% | 4.05% |
| Consumer Cyclical | 7.42% | 12.13% |
| Basic Materials | 2.83% | 2.49% |
The iShares Core Dividend Growth ETF (DGRO) has the most exposure to the Technology sector at 18.98%. This is followed by Financial Services and Healthcare at 18.47% and 17.55% respectively. Energy (0.11%), Basic Materials (2.83%), and Communication Services (4.53%) only make up 7.47% of the fund’s total assets.
DGRO’s mid-section with moderate exposure is comprised of Utilities, Consumer Cyclical, Consumer Defensive, Industrials, and Healthcare stocks at 7.34%, 7.42%, 10.24%, 12.52%, and 17.55%.
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.
VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.
DGRO is 8.89% less exposed to the Technology sector than VBK (18.98% vs 27.87%). DGRO’s exposure to Financial Services and Healthcare stocks is 14.42% higher and 5.69% lower respectively (18.47% vs. 4.05% and 17.55% vs. 23.24%). In total, Energy, Basic Materials, and Communication Services also make up 0.03% less of the fund’s holdings compared to VBK (7.47% vs. 7.50%).
Holdings
| DGRO Holdings | Weight |
| Microsoft Corp | 3.29% |
| Apple Inc | 3.26% |
| Pfizer Inc | 2.89% |
| Johnson & Johnson | 2.87% |
| Procter & Gamble Co | 2.79% |
| Verizon Communications Inc | 2.68% |
| JPMorgan Chase & Co | 2.57% |
| The Home Depot Inc | 2.35% |
| Merck & Co Inc | 2.11% |
| Cisco Systems Inc | 1.98% |
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%.
| VBK Holdings | Weight |
| Charles River Laboratories International Inc | 0.78% |
| Pool Corp | 0.73% |
| Bio-Techne Corp | 0.73% |
| Avantor Inc | 0.73% |
| PerkinElmer Inc | 0.72% |
| Entegris Inc | 0.7% |
| PTC Inc | 0.62% |
| Fair Isaac Corp | 0.57% |
| Bill.com Holdings Inc Ordinary Shares | 0.56% |
| Avalara Inc | 0.55% |
VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.
Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.
Risk Analysis
| DGRO | VBK | |
| Mean Return | 0 | 1.22 |
| R-squared | 0 | 80.56 |
| Std. Deviation | 0 | 17.95 |
| Alpha | 0 | -2.81 |
| Beta | 0 | 1.18 |
| Sharpe Ratio | 0 | 0.78 |
| Treynor Ratio | 0 | 11.18 |
The iShares Core Dividend Growth ETF (DGRO) has a Sharpe Ratio of 0 with a Beta of 0 and a Treynor Ratio of 0. Its Standard Deviation is 0 while DGRO’s R-squared is 0. Furthermore, the fund has a Alpha of 0 and a Mean Return of 0.
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Standard Deviation of 17.95 with a Treynor Ratio of 11.18 and a Beta of 1.18. Its Sharpe Ratio is 0.78 while VBK’s Mean Return is 1.22. Furthermore, the fund has a R-squared of 80.56 and a Alpha of -2.81.
DGRO’s Mean Return is 1.22 points lower than that of VBK and its R-squared is 80.56 points lower. With a Standard Deviation of 0, DGRO is slightly less volatile than VBK. The Alpha and Beta of DGRO are 2.81 points higher and 1.18 points lower than VBK’s Alpha and Beta.
Performance
Annual Returns
| Year | DGRO | VBK |
| 2020 | 9.47% | 35.29% |
| 2019 | 30.02% | 32.75% |
| 2018 | -2.24% | -5.68% |
| 2017 | 22.84% | 21.9% |
| 2016 | 15.27% | 10.74% |
| 2015 | -0.62% | -2.51% |
| 2014 | 0.0% | 4.02% |
| 2013 | 0.0% | 38.18% |
| 2012 | 0.0% | 17.67% |
| 2011 | 0.0% | -1.43% |
| 2010 | 0.0% | 30.87% |
DGRO had its best year in 2019 with an annual return of 30.02%. DGRO’s worst year over the past decade yielded -2.24% and occurred in 2018. In most years the iShares Core Dividend Growth ETF provided moderate returns such as in 2012, 2011, and 2010 where annual returns amounted to 0.0%, 0.0%, and 0.0% respectively.
The year 2013 was the strongest year for VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| DGRO | $10,000 | $19,580 | 12.46% |
| VBK | $10,000 | $22,293 | 16.53% |
A $10,000 investment in DGRO would have resulted in a final balance of $19,580. This is a profit of $9,580 over 6 years and amounts to a compound annual growth rate (CAGR) of 12.46%.
With a $10,000 investment in VBK, the end total would have been $22,293. This equates to a $12,293 profit over 6 years and a compound annual growth rate (CAGR) of 16.53%.
DGRO’s CAGR is 4.07 percentage points lower than that of VBK and as a result, would have yielded $2,713 less on a $10,000 investment. Thus, DGRO performed worse than VBK by 4.07% annually.
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