The iShares S&P 500 Value ETF (IVE) and the Vanguard Mortgage-Backed Securities Index Fund ETF Shares (VMBS) are both among the Top 100 ETFs. IVE is a iShares Large Value fund and VMBS is a Vanguard Intermediate Government fund. So, what’s the difference between IVE and VMBS? And which fund is better?
The expense ratio of IVE is 0.13 percentage points higher than VMBS’s (0.18% vs. 0.05%). IVE also has a high exposure to the financial services sector while VMBS is mostly comprised of AAA bonds. Overall, IVE has provided higher returns than VMBS over the past 10 years.
In this article, we’ll compare IVE vs. VMBS. We’ll look at portfolio growth and industry exposure, as well as at their annual returns and fund composition. Moreover, I’ll also discuss IVE’s and VMBS’s risk metrics, holdings, and performance and examine how these affect their overall returns.
|Name||iShares S&P 500 Value ETF||Vanguard Mortgage-Backed Securities Index Fund ETF Shares|
|Category||Large Value||Intermediate Government|
The iShares S&P 500 Value ETF (IVE) is a Large Value fund that is issued by iShares. It currently has 22.4B total assets under management and has yielded an average annual return of 11.68% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.18%.
The Vanguard Mortgage-Backed Securities Index Fund ETF Shares (VMBS) is a Intermediate Government fund that is issued by Vanguard. It currently has 16.61B total assets under management and has yielded an average annual return of 2.89% over the past 10 years. The fund has a dividend yield of 1.23% with an expense ratio of 0.05%.
IVE’s dividend yield is 0.65% higher than that of VMBS (1.88% vs. 1.23%). Also, IVE yielded on average 8.79% more per year over the past decade (11.68% vs. 2.89%). The expense ratio of IVE is 0.13 percentage points higher than VMBS’s (0.18% vs. 0.05%).
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|Berkshire Hathaway Inc Class B||3.05%|
|JPMorgan Chase & Co||2.65%|
|The Walt Disney Co||1.85%|
|Bank of America Corp||1.67%|
|Johnson & Johnson||1.57%|
|Exxon Mobil Corp||1.41%|
|Cisco Systems Inc||1.35%|
|Verizon Communications Inc||1.33%|
IVE’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, The Walt Disney Co, Bank of America Corp, and Johnson & Johnson at 3.05%, 2.65%, 1.85%, 1.67%, and 1.57%.
Exxon Mobil Corp (1.41%), Pfizer Inc (1.38%), and Cisco Systems Inc (1.35%) have a slightly smaller but still significant weight. Verizon Communications Inc and Intel Corp are also represented in the IVE’s holdings at 1.33% and 1.25%.
|VMBS Bond Sectors||Weight|
VMBS’s Top Bond Sectors are ratings of AAA, Below B, B, BB, and BBB at 100.01%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards A (0.0%), AA (0.0%), and US Government (0.0%) rated bonds.
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The iShares S&P 500 Value ETF (IVE) has a Beta of 1.01 with a Mean Return of 1.05 and a Alpha of -2.9. Its R-squared is 92.08 while IVE’s Sharpe Ratio is 0.83. Furthermore, the fund has a Treynor Ratio of 11.41 and a Standard Deviation of 14.3.
The Vanguard Mortgage-Backed Securities Index Fund ETF Shares (VMBS) has a Treynor Ratio of 3.47 with a Standard Deviation of 2.02 and a R-squared of 65.78. Its Sharpe Ratio is 0.94 while VMBS’s Beta is 0.54. Furthermore, the fund has a Mean Return of 0.21 and a Alpha of 0.37.
IVE’s Mean Return is 0.84 points higher than that of VMBS and its R-squared is 26.30 points higher. With a Standard Deviation of 14.3, IVE is slightly more volatile than VMBS. The Alpha and Beta of IVE are 3.27 points lower and 0.47 points higher than VMBS’s Alpha and Beta.
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IVE had its best year in 2019 with an annual return of 31.71%. IVE’s worst year over the past decade yielded -9.09% and occurred in 2018. In most years the iShares S&P 500 Value ETF provided moderate returns such as in 2014, 2010, and 2017 where annual returns amounted to 12.14%, 14.9%, and 15.19% respectively.
The year 2019 was the strongest year for VMBS, returning 6.17% on an annual basis. The poorest year for VMBS in the last ten years was 2013, with a yield of -1.28%. Most years the Vanguard Mortgage-Backed Securities Index Fund ETF Shares has given investors modest returns, such as in 2017, 2012, and 2020, when gains were 2.37%, 2.47%, and 3.77% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IVE would have resulted in a final balance of $27,285. This is a profit of $17,285 over 10 years and amounts to a compound annual growth rate (CAGR) of 11.68%.
With a $10,000 investment in VMBS, the end total would have been $13,265. This equates to a $3,265 profit over 10 years and a compound annual growth rate (CAGR) of 2.89%.
IVE’s CAGR is 8.79 percentage points higher than that of VMBS and as a result, would have yielded $14,020 more on a $10,000 investment. Thus, IVE outperformed VMBS by 8.79% annually.
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