The SPDR S&P Dividend ETF (SDY) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. SDY is a SPDR State Street Global Advisors Large Value fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between SDY and BIV? And which fund is better?
The expense ratio of SDY is 0.30 percentage points higher than BIV’s (0.35% vs. 0.05%). SDY also has a high exposure to the financial services sector while BIV is mostly comprised of AAA bonds. Overall, SDY has provided higher returns than BIV over the past 11 years.
In this article, we’ll compare SDY vs. BIV. We’ll look at holdings and performance, as well as at their industry exposure and portfolio growth. Moreover, I’ll also discuss SDY’s and BIV’s annual returns, risk metrics, and fund composition and examine how these affect their overall returns.
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Summary
| SDY | BIV | |
| Name | SPDR S&P Dividend ETF | Vanguard Intermediate-Term Bond Index Fund ETF Shares |
| Category | Large Value | Intermediate-Term Bond |
| Issuer | SPDR State Street Global Advisors | Vanguard |
| AUM | 19.67B | 39.05B |
| Avg. Return | 12.44% | 5.31% |
| Div. Yield | 2.65% | 2.06% |
| Expense Ratio | 0.35% | 0.05% |
The SPDR S&P Dividend ETF (SDY) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 19.67B total assets under management and has yielded an average annual return of 12.44% over the past 10 years. The fund has a dividend yield of 2.65% with an expense ratio of 0.35%.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.
SDY’s dividend yield is 0.59% higher than that of BIV (2.65% vs. 2.06%). Also, SDY yielded on average 7.12% more per year over the past decade (12.44% vs. 5.31%). The expense ratio of SDY is 0.30 percentage points higher than BIV’s (0.35% vs. 0.05%).
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Fund Composition
Holdings
| SDY Holdings | Weight |
| Exxon Mobil Corp | 2.81% |
| AT&T Inc | 2.5% |
| South Jersey Industries Inc | 2.22% |
| Chevron Corp | 2.02% |
| International Business Machines Corp | 2.0% |
| AbbVie Inc | 1.93% |
| National Retail Properties Inc | 1.86% |
| Federal Realty Investment Trust | 1.77% |
| Realty Income Corp | 1.7% |
| Old Republic International Corp | 1.65% |
SDY’s Top Holdings are Exxon Mobil Corp, AT&T Inc, South Jersey Industries Inc, Chevron Corp, and International Business Machines Corp at 2.81%, 2.5%, 2.22%, 2.02%, and 2.0%.
AbbVie Inc (1.93%), National Retail Properties Inc (1.86%), and Federal Realty Investment Trust (1.77%) have a slightly smaller but still significant weight. Realty Income Corp and Old Republic International Corp are also represented in the SDY’s holdings at 1.7% and 1.65%.
| BIV Bond Sectors | Weight |
| AAA | 54.51% |
| BBB | 25.24% |
| A | 16.97% |
| AA | 3.1% |
| Others | 0.15% |
| Below B | 0.03% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.
Risk Analysis
| SDY | BIV | |
| Mean Return | 1.07 | 0.35 |
| R-squared | 83.62 | 95.12 |
| Std. Deviation | 12.9 | 4.09 |
| Alpha | -0.1 | -0.07 |
| Beta | 0.87 | 1.33 |
| Sharpe Ratio | 0.95 | 0.89 |
| Treynor Ratio | 13.94 | 2.72 |
The SPDR S&P Dividend ETF (SDY) has a Standard Deviation of 12.9 with a Treynor Ratio of 13.94 and a Mean Return of 1.07. Its Alpha is -0.1 while SDY’s Beta is 0.87. Furthermore, the fund has a R-squared of 83.62 and a Sharpe Ratio of 0.95.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Beta of 1.33 with a Sharpe Ratio of 0.89 and a R-squared of 95.12. Its Alpha is -0.07 while BIV’s Standard Deviation is 4.09. Furthermore, the fund has a Mean Return of 0.35 and a Treynor Ratio of 2.72.
SDY’s Mean Return is 0.72 points higher than that of BIV and its R-squared is 11.50 points lower. With a Standard Deviation of 12.9, SDY is slightly more volatile than BIV. The Alpha and Beta of SDY are 0.03 points lower and 0.46 points lower than BIV’s Alpha and Beta.
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Performance
Annual Returns
| Year | SDY | BIV |
| 2020 | 1.78% | 9.71% |
| 2019 | 23.37% | 10.19% |
| 2018 | -2.73% | -0.09% |
| 2017 | 15.84% | 3.8% |
| 2016 | 20.17% | 2.86% |
| 2015 | -0.7% | 1.23% |
| 2014 | 13.8% | 7.0% |
| 2013 | 30.09% | -3.44% |
| 2012 | 11.51% | 7.02% |
| 2011 | 7.28% | 10.62% |
| 2010 | 16.41% | 9.55% |
SDY had its best year in 2013 with an annual return of 30.09%. SDY’s worst year over the past decade yielded -2.73% and occurred in 2018. In most years the SPDR S&P Dividend ETF provided moderate returns such as in 2012, 2014, and 2017 where annual returns amounted to 11.51%, 13.8%, and 15.84% respectively.
The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SDY | $10,000 | $34,806 | 12.44% |
| BIV | $10,000 | $17,492 | 5.31% |
A $10,000 investment in SDY would have resulted in a final balance of $34,806. This is a profit of $24,806 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.44%.
With a $10,000 investment in BIV, the end total would have been $17,492. This equates to a $7,492 profit over 11 years and a compound annual growth rate (CAGR) of 5.31%.
SDY’s CAGR is 7.12 percentage points higher than that of BIV and as a result, would have yielded $17,314 more on a $10,000 investment. Thus, SDY outperformed BIV by 7.12% annually.
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