The SPDR S&P Dividend ETF (SDY) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. SDY is a SPDR State Street Global Advisors Large Value fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between SDY and VBK? And which fund is better?
The expense ratio of SDY is 0.28 percentage points higher than VBK’s (0.35% vs. 0.07%). SDY also has a higher exposure to the financial services sector and a lower standard deviation. Overall, SDY has provided lower returns than VBK over the past 11 years.
In this article, we’ll compare SDY vs. VBK. We’ll look at fund composition and industry exposure, as well as at their risk metrics and portfolio growth. Moreover, I’ll also discuss SDY’s and VBK’s performance, holdings, and annual returns and examine how these affect their overall returns.
Summary
| SDY | VBK | |
| Name | SPDR S&P Dividend ETF | Vanguard Small-Cap Growth Index Fund ETF Shares |
| Category | Large Value | Small Growth |
| Issuer | SPDR State Street Global Advisors | Vanguard |
| AUM | 19.67B | 37.89B |
| Avg. Return | 12.44% | 16.53% |
| Div. Yield | 2.65% | 0.45% |
| Expense Ratio | 0.35% | 0.07% |
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 Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.
SDY’s dividend yield is 2.20% higher than that of VBK (2.65% vs. 0.45%). Also, SDY yielded on average 4.09% less per year over the past decade (12.44% vs. 16.53%). The expense ratio of SDY is 0.28 percentage points higher than VBK’s (0.35% vs. 0.07%).
Fund Composition
Industry Exposure
| SDY | VBK | |
| Technology | 2.0% | 27.87% |
| Industrials | 15.89% | 13.19% |
| Energy | 5.95% | 1.77% |
| Communication Services | 4.64% | 3.24% |
| Utilities | 12.14% | 0.32% |
| Healthcare | 7.35% | 23.24% |
| Consumer Defensive | 14.01% | 3.83% |
| Real Estate | 6.57% | 7.87% |
| Financial Services | 16.32% | 4.05% |
| Consumer Cyclical | 8.68% | 12.13% |
| Basic Materials | 6.45% | 2.49% |
The SPDR S&P Dividend ETF (SDY) has the most exposure to the Financial Services sector at 16.32%. This is followed by Industrials and Consumer Defensive at 15.89% and 14.01% respectively. Communication Services (4.64%), Energy (5.95%), and Basic Materials (6.45%) only make up 17.04% of the fund’s total assets.
SDY’s mid-section with moderate exposure is comprised of Real Estate, Healthcare, Consumer Cyclical, Utilities, and Consumer Defensive stocks at 6.57%, 7.35%, 8.68%, 12.14%, and 14.01%.
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.
VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.
SDY is 12.27% more exposed to the Financial Services sector than VBK (16.32% vs 4.05%). SDY’s exposure to Industrials and Consumer Defensive stocks is 2.70% higher and 10.18% higher respectively (15.89% vs. 13.19% and 14.01% vs. 3.83%). In total, Communication Services, Energy, and Basic Materials also make up 9.54% more of the fund’s holdings compared to VBK (17.04% vs. 7.50%).
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%.
| VBK Holdings | Weight |
| Charles River Laboratories International Inc | 0.78% |
| Pool Corp | 0.73% |
| Bio-Techne Corp | 0.73% |
| Avantor Inc | 0.73% |
| PerkinElmer Inc | 0.72% |
| Entegris Inc | 0.7% |
| PTC Inc | 0.62% |
| Fair Isaac Corp | 0.57% |
| Bill.com Holdings Inc Ordinary Shares | 0.56% |
| Avalara Inc | 0.55% |
VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.
Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.
Risk Analysis
| SDY | VBK | |
| Mean Return | 1.07 | 1.22 |
| R-squared | 83.62 | 80.56 |
| Std. Deviation | 12.9 | 17.95 |
| Alpha | -0.1 | -2.81 |
| Beta | 0.87 | 1.18 |
| Sharpe Ratio | 0.95 | 0.78 |
| Treynor Ratio | 13.94 | 11.18 |
The SPDR S&P Dividend ETF (SDY) has a Standard Deviation of 12.9 with a Alpha of -0.1 and a Mean Return of 1.07. Its Treynor Ratio is 13.94 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 Small-Cap Growth Index Fund ETF Shares (VBK) has a Alpha of -2.81 with a Standard Deviation of 17.95 and a R-squared of 80.56. Its Sharpe Ratio is 0.78 while VBK’s Beta is 1.18. Furthermore, the fund has a Mean Return of 1.22 and a Treynor Ratio of 11.18.
SDY’s Mean Return is 0.15 points lower than that of VBK and its R-squared is 3.06 points higher. With a Standard Deviation of 12.9, SDY is slightly less volatile than VBK. The Alpha and Beta of SDY are 2.71 points higher and 0.31 points lower than VBK’s Alpha and Beta.
Performance
Annual Returns
| Year | SDY | VBK |
| 2020 | 1.78% | 35.29% |
| 2019 | 23.37% | 32.75% |
| 2018 | -2.73% | -5.68% |
| 2017 | 15.84% | 21.9% |
| 2016 | 20.17% | 10.74% |
| 2015 | -0.7% | -2.51% |
| 2014 | 13.8% | 4.02% |
| 2013 | 30.09% | 38.18% |
| 2012 | 11.51% | 17.67% |
| 2011 | 7.28% | -1.43% |
| 2010 | 16.41% | 30.87% |
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 2013 was the strongest year for VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SDY | $10,000 | $34,806 | 12.44% |
| VBK | $10,000 | $48,639 | 16.53% |
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 VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.
SDY’s CAGR is 4.09 percentage points lower than that of VBK and as a result, would have yielded $13,833 less on a $10,000 investment. Thus, SDY performed worse than VBK by 4.09% annually.
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