The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) and the Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) are both among the Top 100 ETFs. IGSB is a iShares Short-Term Bond fund and VOE is a Vanguard Mid-Cap Value fund. So, what’s the difference between IGSB and VOE? And which fund is better?
The expense ratio of IGSB is 0.01 percentage points lower than VOE’s (0.06% vs. 0.07%). IGSB is mostly comprised of BBB bonds while VOE has a high exposure to the financial services sector. Overall, IGSB has provided lower returns than VOE over the past 11 years.
In this article, we’ll compare IGSB vs. VOE. We’ll look at annual returns and performance, as well as at their holdings and risk metrics. Moreover, I’ll also discuss IGSB’s and VOE’s fund composition, industry exposure, and portfolio growth and examine how these affect their overall returns.
|Name||iShares 1-5 Year Investment Grade Corporate Bond ETF||Vanguard Mid-Cap Value Index Fund ETF Shares|
|Category||Short-Term Bond||Mid-Cap Value|
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.
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%.
IGSB’s dividend yield is 0.15% higher than that of VOE (2.02% vs. 1.87%). Also, IGSB yielded on average 10.02% less per year over the past decade (2.51% vs. 12.52%). The expense ratio of IGSB is 0.01 percentage points lower than VOE’s (0.06% vs. 0.07%).
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|IGSB Bond Sectors||Weight|
IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.
|Carrier Global Corp Ordinary Shares||1.28%|
|International Flavors & Fragrances Inc||1.13%|
|Motorola Solutions Inc||1.12%|
|Discover Financial Services||1.09%|
|Valero Energy Corp||0.97%|
|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%.
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The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Standard Deviation of 2 with a R-squared of 26.13 and a Sharpe Ratio of 0.82. Its Alpha is 0.69 while IGSB’s Beta is 0.34. Furthermore, the fund has a Treynor Ratio of 4.82 and a Mean Return of 0.19.
The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a Alpha of -3.77 with a Standard Deviation of 15.98 and a Beta of 1.11. Its Treynor Ratio is 10.19 while VOE’s Sharpe Ratio is 0.75. Furthermore, the fund has a R-squared of 88.76 and a Mean Return of 1.05.
IGSB’s Mean Return is 0.86 points lower than that of VOE and its R-squared is 62.63 points lower. With a Standard Deviation of 2, IGSB is slightly less volatile than VOE. The Alpha and Beta of IGSB are 4.46 points higher and 0.77 points lower than VOE’s Alpha and Beta.
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IGSB had its best year in 2019 with an annual return of 7.01%. IGSB’s worst year over the past decade yielded 0.7% and occurred in 2015. In most years the iShares 1-5 Year Investment Grade Corporate Bond ETF provided moderate returns such as in 2011, 2017, and 2016 where annual returns amounted to 1.34%, 1.41%, and 1.77% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IGSB would have resulted in a final balance of $13,103. This is a profit of $3,103 over 11 years and amounts to a compound annual growth rate (CAGR) of 2.51%.
With a $10,000 investment in VOE, the end total would have been $33,655. This equates to a $23,655 profit over 11 years and a compound annual growth rate (CAGR) of 12.52%.
IGSB’s CAGR is 10.02 percentage points lower than that of VOE and as a result, would have yielded $20,552 less on a $10,000 investment. Thus, IGSB performed worse than VOE by 10.02% annually.
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