The iShares Core Total USD Bond Market ETF (IUSB) and the Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) are both among the Top 100 ETFs. IUSB is a iShares N/A fund and VOE is a Vanguard Mid-Cap Value fund. So, what’s the difference between IUSB and VOE? And which fund is better?

The expense ratio of IUSB is 0.01 percentage points lower than VOE’s (0.06% vs. 0.07%). IUSB is mostly comprised of AAA bonds while VOE has a high exposure to the financial services sector. Overall, IUSB has provided lower returns than VOE over the past 6 years.

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

Summary

IUSBVOE
NameiShares Core Total USD Bond Market ETFVanguard Mid-Cap Value Index Fund ETF Shares
CategoryN/AMid-Cap Value
IssueriSharesVanguard
AUM14.49B26.78B
Avg. Return4.13%12.52%
Div. Yield2.1%1.87%
Expense Ratio0.06%0.07%

The iShares Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% 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%.

IUSB’s dividend yield is 0.23% higher than that of VOE (2.1% vs. 1.87%). Also, IUSB yielded on average 8.40% less per year over the past decade (4.13% vs. 12.52%). The expense ratio of IUSB is 0.01 percentage points lower than VOE’s (0.06% vs. 0.07%).

Fund Composition

Holdings

IUSB - Holdings

IUSB Bond SectorsWeight
AAA58.32%
BBB16.98%
A12.27%
BB4.33%
AA3.36%
B2.8%
Others1.01%
Below B0.92%
US Government0.0%

IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.

VOE - Holdings

VOE HoldingsWeight
Carrier Global Corp Ordinary Shares1.28%
International Flavors & Fragrances Inc1.13%
Motorola Solutions Inc1.12%
Discover Financial Services1.09%
Welltower Inc1.05%
Corteva Inc0.99%
Valero Energy Corp0.97%
Corning Inc0.95%
Willis Towers Watson PLC0.9%
D.R. Horton Inc0.89%

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

IUSBVOE
Mean Return01.05
R-squared088.76
Std. Deviation015.98
Alpha0-3.77
Beta01.11
Sharpe Ratio00.75
Treynor Ratio010.19

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

The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a R-squared of 88.76 with a Standard Deviation of 15.98 and a Treynor Ratio of 10.19. Its Beta is 1.11 while VOE’s Alpha is -3.77. Furthermore, the fund has a Mean Return of 1.05 and a Sharpe Ratio of 0.75.

IUSB’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, IUSB is slightly less volatile than VOE. The Alpha and Beta of IUSB are 3.77 points higher and 1.11 points lower than VOE’s Alpha and Beta.

Performance

Annual Returns

IUSB vs. VOE - Annual Returns

YearIUSBVOE
20207.59%2.5%
20199.26%27.98%
2018-0.38%-12.41%
20174.06%17.05%
20163.78%15.26%
20150.46%-1.8%
20140.0%13.98%
20130.0%37.65%
20120.0%16.04%
20110.0%-0.32%
20100.0%21.83%

IUSB had its best year in 2019 with an annual return of 9.26%. IUSB’s worst year over the past decade yielded -0.38% and occurred in 2018. In most years the iShares Core Total USD Bond Market ETF provided moderate returns such as in 2011, 2010, and 2015 where annual returns amounted to 0.0%, 0.0%, and 0.46% 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

IUSB vs. VOE - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IUSB$10,000$12,7044.13%
VOE$10,000$15,22212.52%

A $10,000 investment in IUSB would have resulted in a final balance of $12,704. This is a profit of $2,704 over 6 years and amounts to a compound annual growth rate (CAGR) of 4.13%.

With a $10,000 investment in VOE, the end total would have been $15,222. This equates to a $5,222 profit over 6 years and a compound annual growth rate (CAGR) of 12.52%.

IUSB’s CAGR is 8.40 percentage points lower than that of VOE and as a result, would have yielded $2,518 less on a $10,000 investment. Thus, IUSB performed worse than VOE by 8.40% annually.

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