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IVE vs. VTIP: What’s The Difference?

The iShares S&P 500 Value ETF (IVE) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. IVE is a iShares Large Value fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between IVE and VTIP? And which fund is better?

The expense ratio of IVE is 0.13 percentage points higher than VTIP’s (0.18% vs. 0.05%). IVE also has a high exposure to the financial services sector while VTIP is mostly comprised of AAA bonds. Overall, IVE has provided higher returns than VTIP over the past 7 years.

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

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Summary

IVEVTIP
NameiShares S&P 500 Value ETFVanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares
CategoryLarge ValueInflation-Protected Bond
IssueriSharesVanguard
AUM22.4B50.67B
Avg. Return11.68%1.79%
Div. Yield1.88%1.35%
Expense Ratio0.18%0.05%

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 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%.

IVE’s dividend yield is 0.53% higher than that of VTIP (1.88% vs. 1.35%). Also, IVE yielded on average 9.89% more per year over the past decade (11.68% vs. 1.79%). The expense ratio of IVE is 0.13 percentage points higher than VTIP’s (0.18% vs. 0.05%).

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Fund Composition

Holdings

IVE - Holdings

IVE HoldingsWeight
Berkshire Hathaway Inc Class B3.05%
JPMorgan Chase & Co2.65%
The Walt Disney Co1.85%
Bank of America Corp1.67%
Johnson & Johnson1.57%
Exxon Mobil Corp1.41%
Pfizer Inc1.38%
Cisco Systems Inc1.35%
Verizon Communications Inc1.33%
Intel Corp1.25%

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%.

VTIP - Holdings

VTIP Bond SectorsWeight
AAA99.87%
Others0.13%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

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.

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Risk Analysis

IVEVTIP
Mean Return1.050
R-squared92.080
Std. Deviation14.30
Alpha-2.90
Beta1.010
Sharpe Ratio0.830
Treynor Ratio11.410

The iShares S&P 500 Value ETF (IVE) has a Alpha of -2.9 with a Treynor Ratio of 11.41 and a Beta of 1.01. Its Standard Deviation is 14.3 while IVE’s R-squared is 92.08. Furthermore, the fund has a Mean Return of 1.05 and a Sharpe Ratio of 0.83.

The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Treynor Ratio of 0 with a Mean Return of 0 and a Sharpe Ratio of 0. Its Standard Deviation is 0 while VTIP’s R-squared is 0. Furthermore, the fund has a Beta of 0 and a Alpha of 0.

IVE’s Mean Return is 1.05 points higher than that of VTIP and its R-squared is 92.08 points higher. With a Standard Deviation of 14.3, IVE is slightly more volatile than VTIP. The Alpha and Beta of IVE are 2.90 points lower and 1.01 points higher than VTIP’s Alpha and Beta.

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Performance

Annual Returns

IVE vs. VTIP - Annual Returns

YearIVEVTIP
20201.24%4.97%
201931.71%4.83%
2018-9.09%0.54%
201715.19%0.82%
201617.17%2.71%
2015-3.24%-0.15%
201412.14%-1.17%
201331.69%-1.55%
201217.45%0.0%
2011-0.63%0.0%
201014.9%0.0%

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 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

IVE vs. VTIP - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IVE$10,000$17,75211.68%
VTIP$10,000$11,3051.79%

A $10,000 investment in IVE would have resulted in a final balance of $17,752. This is a profit of $7,752 over 7 years and amounts to a compound annual growth rate (CAGR) of 11.68%.

With a $10,000 investment in VTIP, the end total would have been $11,305. This equates to a $1,305 profit over 7 years and a compound annual growth rate (CAGR) of 1.79%.

IVE’s CAGR is 9.89 percentage points higher than that of VTIP and as a result, would have yielded $6,447 more on a $10,000 investment. Thus, IVE outperformed VTIP by 9.89% annually.


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