The SPDR S&P Dividend ETF (SDY) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. SDY is a SPDR State Street Global Advisors Large Value fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between SDY and VTIP? And which fund is better?
The expense ratio of SDY is 0.30 percentage points higher than VTIP’s (0.35% vs. 0.05%). SDY also has a high exposure to the financial services sector while VTIP is mostly comprised of AAA bonds. Overall, SDY has provided higher returns than VTIP over the past 7 years.
In this article, we’ll compare SDY vs. VTIP. We’ll look at annual returns and risk metrics, as well as at their industry exposure and fund composition. Moreover, I’ll also discuss SDY’s and VTIP’s portfolio growth, holdings, and performance and examine how these affect their overall returns.
|Name||SPDR S&P Dividend ETF||Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares|
|Category||Large Value||Inflation-Protected Bond|
|Issuer||SPDR State Street Global Advisors||Vanguard|
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 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%.
SDY’s dividend yield is 1.30% higher than that of VTIP (2.65% vs. 1.35%). Also, SDY yielded on average 10.65% more per year over the past decade (12.44% vs. 1.79%). The expense ratio of SDY is 0.30 percentage points higher than VTIP’s (0.35% vs. 0.05%).
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|Exxon Mobil Corp||2.81%|
|South Jersey Industries Inc||2.22%|
|International Business Machines Corp||2.0%|
|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%.
|VTIP Bond Sectors||Weight|
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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The SPDR S&P Dividend ETF (SDY) has a Mean Return of 1.07 with a Alpha of -0.1 and a R-squared of 83.62. Its Treynor Ratio is 13.94 while SDY’s Sharpe Ratio is 0.95. Furthermore, the fund has a Beta of 0.87 and a Standard Deviation of 12.9.
The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Standard Deviation of 0 with a Mean Return of 0 and a Beta of 0. Its Sharpe Ratio is 0 while VTIP’s Treynor Ratio is 0. Furthermore, the fund has a Alpha of 0 and a R-squared of 0.
SDY’s Mean Return is 1.07 points higher than that of VTIP and its R-squared is 83.62 points higher. With a Standard Deviation of 12.9, SDY is slightly more volatile than VTIP. The Alpha and Beta of SDY are 0.10 points lower and 0.87 points higher than VTIP’s Alpha and Beta.
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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 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in SDY would have resulted in a final balance of $19,213. This is a profit of $9,213 over 7 years and amounts to a compound annual growth rate (CAGR) of 12.44%.
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%.
SDY’s CAGR is 10.65 percentage points higher than that of VTIP and as a result, would have yielded $7,908 more on a $10,000 investment. Thus, SDY outperformed VTIP by 10.65% annually.
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