The iShares Core Dividend Growth ETF (DGRO) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. DGRO is a iShares Large Value fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between DGRO and VTIP? And which fund is better?
The expense ratio of DGRO is 0.03 percentage points higher than VTIP’s (0.08% vs. 0.05%). DGRO also has a high exposure to the technology sector while VTIP is mostly comprised of AAA bonds. Overall, DGRO has provided higher returns than VTIP over the past 6 years.
In this article, we’ll compare DGRO vs. VTIP. We’ll look at holdings and performance, as well as at their fund composition and portfolio growth. Moreover, I’ll also discuss DGRO’s and VTIP’s risk metrics, industry exposure, and annual returns and examine how these affect their overall returns.
Summary
| DGRO | VTIP | |
| Name | iShares Core Dividend Growth ETF | Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares |
| Category | Large Value | Inflation-Protected Bond |
| Issuer | iShares | Vanguard |
| AUM | 20B | 50.67B |
| Avg. Return | 12.46% | 1.79% |
| Div. Yield | 2.04% | 1.35% |
| Expense Ratio | 0.08% | 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%.
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%.
DGRO’s dividend yield is 0.69% higher than that of VTIP (2.04% vs. 1.35%). Also, DGRO yielded on average 10.66% more per year over the past decade (12.46% vs. 1.79%). The expense ratio of DGRO is 0.03 percentage points higher than VTIP’s (0.08% vs. 0.05%).
Fund Composition
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%.
| 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
| DGRO | VTIP | |
| Mean Return | 0 | 0 |
| R-squared | 0 | 0 |
| Std. Deviation | 0 | 0 |
| Alpha | 0 | 0 |
| Beta | 0 | 0 |
| Sharpe Ratio | 0 | 0 |
| Treynor Ratio | 0 | 0 |
The iShares Core Dividend Growth ETF (DGRO) has a Mean Return of 0 with a Alpha of 0 and a Beta of 0. Its R-squared is 0 while DGRO’s Sharpe Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a Treynor Ratio of 0.
The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Mean Return of 0 with a R-squared of 0 and a Standard Deviation of 0. Its Sharpe Ratio is 0 while VTIP’s Treynor Ratio is 0. Furthermore, the fund has a Alpha of 0 and a Beta of 0.
DGRO’s Mean Return is 0.00 points lower than that of VTIP and its R-squared is 0.00 points lower. With a Standard Deviation of 0, DGRO is slightly less volatile than VTIP. The Alpha and Beta of DGRO are 0.00 points lower and 0.00 points lower than VTIP’s Alpha and Beta.
Performance
Annual Returns
| Year | DGRO | VTIP |
| 2020 | 9.47% | 4.97% |
| 2019 | 30.02% | 4.83% |
| 2018 | -2.24% | 0.54% |
| 2017 | 22.84% | 0.82% |
| 2016 | 15.27% | 2.71% |
| 2015 | -0.62% | -0.15% |
| 2014 | 0.0% | -1.17% |
| 2013 | 0.0% | -1.55% |
| 2012 | 0.0% | 0.0% |
| 2011 | 0.0% | 0.0% |
| 2010 | 0.0% | 0.0% |
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 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
| Fund | Initial Balance | Final Balance | CAGR |
| DGRO | $10,000 | $19,580 | 12.46% |
| VTIP | $10,000 | $11,439 | 1.79% |
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 VTIP, the end total would have been $11,439. This equates to a $1,439 profit over 6 years and a compound annual growth rate (CAGR) of 1.79%.
DGRO’s CAGR is 10.66 percentage points higher than that of VTIP and as a result, would have yielded $8,141 more on a $10,000 investment. Thus, DGRO outperformed VTIP by 10.66% annually.
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