The iShares MSCI USA Quality Factor ETF (QUAL) and the Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) are both among the Top 100 ETFs. QUAL is a iShares Large Blend fund and VOE is a Vanguard Mid-Cap Value fund. So, what’s the difference between QUAL and VOE? And which fund is better?
The expense ratio of QUAL is 0.08 percentage points higher than VOE’s (0.15% vs. 0.07%). QUAL also has a higher exposure to the technology sector and a lower standard deviation. Overall, QUAL has provided higher returns than VOE over the past 7 years.
In this article, we’ll compare QUAL vs. VOE. We’ll look at industry exposure and holdings, as well as at their fund composition and portfolio growth. Moreover, I’ll also discuss QUAL’s and VOE’s performance, annual returns, and risk metrics and examine how these affect their overall returns.
Summary
| QUAL | VOE | |
| Name | iShares MSCI USA Quality Factor ETF | Vanguard Mid-Cap Value Index Fund ETF Shares |
| Category | Large Blend | Mid-Cap Value |
| Issuer | iShares | Vanguard |
| AUM | 23.93B | 26.78B |
| Avg. Return | 13.42% | 12.52% |
| Div. Yield | 1.29% | 1.87% |
| Expense Ratio | 0.15% | 0.07% |
The iShares MSCI USA Quality Factor ETF (QUAL) is a Large Blend fund that is issued by iShares. It currently has 23.93B total assets under management and has yielded an average annual return of 13.42% over the past 10 years. The fund has a dividend yield of 1.29% with an expense ratio of 0.15%.
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%.
QUAL’s dividend yield is 0.58% lower than that of VOE (1.29% vs. 1.87%). Also, QUAL yielded on average 0.90% more per year over the past decade (13.42% vs. 12.52%). The expense ratio of QUAL is 0.08 percentage points higher than VOE’s (0.15% vs. 0.07%).
Fund Composition
Industry Exposure
| QUAL | VOE | |
| Technology | 22.52% | 9.85% |
| Industrials | 9.22% | 9.4% |
| Energy | 2.24% | 5.69% |
| Communication Services | 11.44% | 5.27% |
| Utilities | 2.41% | 10.93% |
| Healthcare | 13.22% | 7.04% |
| Consumer Defensive | 8.57% | 4.85% |
| Real Estate | 2.72% | 11.48% |
| Financial Services | 15.87% | 18.26% |
| Consumer Cyclical | 9.43% | 11.8% |
| Basic Materials | 2.35% | 5.44% |
The iShares MSCI USA Quality Factor ETF (QUAL) has the most exposure to the Technology sector at 22.52%. This is followed by Financial Services and Healthcare at 15.87% and 13.22% respectively. Basic Materials (2.35%), Utilities (2.41%), and Real Estate (2.72%) only make up 7.48% of the fund’s total assets.
QUAL’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Consumer Cyclical, Communication Services, and Healthcare stocks at 8.57%, 9.22%, 9.43%, 11.44%, and 13.22%.
The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has the most exposure to the Financial Services sector at 18.26%. This is followed by Consumer Cyclical and Real Estate at 11.8% and 11.48% respectively. Communication Services (5.27%), Basic Materials (5.44%), and Energy (5.69%) only make up 16.40% of the fund’s total assets.
VOE’s mid-section with moderate exposure is comprised of Healthcare, Industrials, Technology, Utilities, and Real Estate stocks at 7.04%, 9.4%, 9.85%, 10.93%, and 11.48%.
QUAL is 12.67% more exposed to the Technology sector than VOE (22.52% vs 9.85%). QUAL’s exposure to Financial Services and Healthcare stocks is 2.39% lower and 6.18% higher respectively (15.87% vs. 18.26% and 13.22% vs. 7.04%). In total, Basic Materials, Utilities, and Real Estate also make up 20.37% less of the fund’s holdings compared to VOE (7.48% vs. 27.85%).
Holdings
| QUAL Holdings | Weight |
| Facebook Inc Class A | 4.77% |
| Nike Inc Class B | 4.05% |
| Microsoft Corp | 3.54% |
| Apple Inc | 3.52% |
| Johnson & Johnson | 2.99% |
| BlackRock Inc | 2.87% |
| Target Corp | 2.8% |
| Mastercard Inc Class A | 2.72% |
| NVIDIA Corp | 2.71% |
| Alphabet Inc Class A | 2.49% |
QUAL’s Top Holdings are Facebook Inc Class A, Nike Inc Class B, Microsoft Corp, Apple Inc, and Johnson & Johnson at 4.77%, 4.05%, 3.54%, 3.52%, and 2.99%.
BlackRock Inc (2.87%), Target Corp (2.8%), and Mastercard Inc Class A (2.72%) have a slightly smaller but still significant weight. NVIDIA Corp and Alphabet Inc Class A are also represented in the QUAL’s holdings at 2.71% and 2.49%.
| 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
| QUAL | 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 MSCI USA Quality Factor ETF (QUAL) has a Alpha of 0 with a Treynor Ratio of 0 and a Beta of 0. Its Mean Return is 0 while QUAL’s Standard Deviation is 0. Furthermore, the fund has a R-squared of 0 and a Sharpe Ratio of 0.
The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a Treynor Ratio of 10.19 with a Mean Return of 1.05 and a R-squared of 88.76. Its Beta is 1.11 while VOE’s Alpha is -3.77. Furthermore, the fund has a Sharpe Ratio of 0.75 and a Standard Deviation of 15.98.
QUAL’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, QUAL is slightly less volatile than VOE. The Alpha and Beta of QUAL are 3.77 points higher and 1.11 points lower than VOE’s Alpha and Beta.
Performance
Annual Returns
| Year | QUAL | VOE |
| 2020 | 16.96% | 2.5% |
| 2019 | 34.14% | 27.98% |
| 2018 | -5.77% | -12.41% |
| 2017 | 22.26% | 17.05% |
| 2016 | 9.18% | 15.26% |
| 2015 | 5.56% | -1.8% |
| 2014 | 11.62% | 13.98% |
| 2013 | 0.0% | 37.65% |
| 2012 | 0.0% | 16.04% |
| 2011 | 0.0% | -0.32% |
| 2010 | 0.0% | 21.83% |
QUAL had its best year in 2019 with an annual return of 34.14%. QUAL’s worst year over the past decade yielded -5.77% and occurred in 2018. In most years the iShares MSCI USA Quality Factor ETF provided moderate returns such as in 2010, 2015, and 2016 where annual returns amounted to 0.0%, 5.56%, and 9.18% 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 |
| QUAL | $10,000 | $23,251 | 13.42% |
| VOE | $10,000 | $17,350 | 12.52% |
A $10,000 investment in QUAL would have resulted in a final balance of $23,251. This is a profit of $13,251 over 7 years and amounts to a compound annual growth rate (CAGR) of 13.42%.
With a $10,000 investment in VOE, the end total would have been $17,350. This equates to a $7,350 profit over 7 years and a compound annual growth rate (CAGR) of 12.52%.
QUAL’s CAGR is 0.90 percentage points higher than that of VOE and as a result, would have yielded $5,901 more on a $10,000 investment. Thus, QUAL outperformed VOE by 0.90% annually.
Current recommendations:
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
