The iShares U.S. Treasury Bond ETF (GOVT) and the Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) are both among the Top 100 ETFs. GOVT is a iShares Intermediate Government fund and VOE is a Vanguard Mid-Cap Value fund. So, what’s the difference between GOVT and VOE? And which fund is better?
The expense ratio of GOVT is 0.02 percentage points lower than VOE’s (0.05% vs. 0.07%). GOVT is mostly comprised of AAA bonds while VOE has a high exposure to the financial services sector. Overall, GOVT has provided lower returns than VOE over the past 8 years.
In this article, we’ll compare GOVT vs. VOE. We’ll look at annual returns and portfolio growth, as well as at their risk metrics and holdings. Moreover, I’ll also discuss GOVT’s and VOE’s performance, industry exposure, and fund composition and examine how these affect their overall returns.
Summary
| GOVT | VOE | |
| Name | iShares U.S. Treasury Bond ETF | Vanguard Mid-Cap Value Index Fund ETF Shares |
| Category | Intermediate Government | Mid-Cap Value |
| Issuer | iShares | Vanguard |
| AUM | 17.07B | 26.78B |
| Avg. Return | 2.67% | 12.52% |
| Div. Yield | 1.0% | 1.87% |
| Expense Ratio | 0.05% | 0.07% |
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%.
The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) is a Mid-Cap Value fund that is issued by Vanguard. It currently has 26.78B total assets under management and has yielded an average annual return of 12.52% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.07%.
GOVT’s dividend yield is 0.87% lower than that of VOE (1.0% vs. 1.87%). Also, GOVT yielded on average 9.85% less per year over the past decade (2.67% vs. 12.52%). The expense ratio of GOVT is 0.02 percentage points lower than VOE’s (0.05% vs. 0.07%).
Fund Composition
Holdings
| GOVT Bond Sectors | Weight |
| AAA | 100.0% |
| Others | 0.0% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
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.
| VOE Holdings | Weight |
| Carrier Global Corp Ordinary Shares | 1.28% |
| International Flavors & Fragrances Inc | 1.13% |
| Motorola Solutions Inc | 1.12% |
| Discover Financial Services | 1.09% |
| Welltower Inc | 1.05% |
| Corteva Inc | 0.99% |
| Valero Energy Corp | 0.97% |
| Corning Inc | 0.95% |
| Willis Towers Watson PLC | 0.9% |
| D.R. Horton Inc | 0.89% |
VOE’s Top Holdings are Carrier Global Corp Ordinary Shares, International Flavors & Fragrances Inc, Motorola Solutions Inc, Discover Financial Services, and Welltower Inc at 1.28%, 1.13%, 1.12%, 1.09%, and 1.05%.
Corteva Inc (0.99%), Valero Energy Corp (0.97%), and Corning Inc (0.95%) have a slightly smaller but still significant weight. Willis Towers Watson PLC and D.R. Horton Inc are also represented in the VOE’s holdings at 0.9% and 0.89%.
Risk Analysis
| GOVT | VOE | |
| Mean Return | 0 | 1.05 |
| R-squared | 0 | 88.76 |
| Std. Deviation | 0 | 15.98 |
| Alpha | 0 | -3.77 |
| Beta | 0 | 1.11 |
| Sharpe Ratio | 0 | 0.75 |
| Treynor Ratio | 0 | 10.19 |
The iShares U.S. Treasury Bond ETF (GOVT) has a Sharpe Ratio of 0 with a Standard Deviation of 0 and a Alpha of 0. Its Beta is 0 while GOVT’s Treynor Ratio is 0. Furthermore, the fund has a Mean Return of 0 and a R-squared of 0.
The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a Sharpe Ratio of 0.75 with a Alpha of -3.77 and a Treynor Ratio of 10.19. Its Mean Return is 1.05 while VOE’s Beta is 1.11. Furthermore, the fund has a R-squared of 88.76 and a Standard Deviation of 15.98.
GOVT’s Mean Return is 1.05 points lower than that of VOE and its R-squared is 88.76 points lower. With a Standard Deviation of 0, GOVT is slightly less volatile than VOE. The Alpha and Beta of GOVT are 3.77 points higher and 1.11 points lower than VOE’s Alpha and Beta.
Performance
Annual Returns
| Year | GOVT | VOE |
| 2020 | 7.92% | 2.5% |
| 2019 | 6.71% | 27.98% |
| 2018 | 0.74% | -12.41% |
| 2017 | 2.19% | 17.05% |
| 2016 | 0.92% | 15.26% |
| 2015 | 0.76% | -1.8% |
| 2014 | 4.99% | 13.98% |
| 2013 | -2.84% | 37.65% |
| 2012 | 0.0% | 16.04% |
| 2011 | 0.0% | -0.32% |
| 2010 | 0.0% | 21.83% |
GOVT had its best year in 2020 with an annual return of 7.92%. GOVT’s worst year over the past decade yielded -2.84% and occurred in 2013. In most years the iShares U.S. Treasury Bond ETF provided moderate returns such as in 2018, 2015, and 2016 where annual returns amounted to 0.74%, 0.76%, and 0.92% respectively.
The year 2013 was the strongest year for VOE, returning 37.65% on an annual basis. The poorest year for VOE in the last ten years was 2018, with a yield of -12.41%. Most years the Vanguard Mid-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 13.98%, 15.26%, and 16.04% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| GOVT | $10,000 | $12,297 | 2.67% |
| VOE | $10,000 | $23,882 | 12.52% |
A $10,000 investment in GOVT would have resulted in a final balance of $12,297. This is a profit of $2,297 over 8 years and amounts to a compound annual growth rate (CAGR) of 2.67%.
With a $10,000 investment in VOE, the end total would have been $23,882. This equates to a $13,882 profit over 8 years and a compound annual growth rate (CAGR) of 12.52%.
GOVT’s CAGR is 9.85 percentage points lower than that of VOE and as a result, would have yielded $11,585 less on a $10,000 investment. Thus, GOVT performed worse than VOE by 9.85% annually.
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