The iShares 1-3 Year Treasury Bond ETF (SHY) and the Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) are both among the Top 100 ETFs. SHY is a iShares Short Government fund and VOE is a Vanguard Mid-Cap Value fund. So, what’s the difference between SHY and VOE? And which fund is better?
The expense ratio of SHY is 0.08 percentage points higher than VOE’s (0.15% vs. 0.07%). SHY is mostly comprised of AAA bonds while VOE has a high exposure to the financial services sector. Overall, SHY has provided lower returns than VOE over the past 11 years.
In this article, we’ll compare SHY vs. VOE. We’ll look at industry exposure and annual returns, as well as at their performance and risk metrics. Moreover, I’ll also discuss SHY’s and VOE’s portfolio growth, fund composition, and holdings and examine how these affect their overall returns.
|Name||iShares 1-3 Year Treasury Bond ETF||Vanguard Mid-Cap Value Index Fund ETF Shares|
|Category||Short Government||Mid-Cap Value|
The iShares 1-3 Year Treasury Bond ETF (SHY) is a Short Government fund that is issued by iShares. It currently has 19.51B total assets under management and has yielded an average annual return of 1.27% over the past 10 years. The fund has a dividend yield of 0.46% 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%.
SHY’s dividend yield is 1.41% lower than that of VOE (0.46% vs. 1.87%). Also, SHY yielded on average 11.25% less per year over the past decade (1.27% vs. 12.52%). The expense ratio of SHY is 0.08 percentage points higher than VOE’s (0.15% vs. 0.07%).
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|SHY Bond Sectors||Weight|
SHY’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.67%, 0.33%, 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.
|Carrier Global Corp Ordinary Shares||1.28%|
|International Flavors & Fragrances Inc||1.13%|
|Motorola Solutions Inc||1.12%|
|Discover Financial Services||1.09%|
|Valero Energy Corp||0.97%|
|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%.
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The iShares 1-3 Year Treasury Bond ETF (SHY) has a Mean Return of 0.09 with a Alpha of -0.03 and a Beta of 0.18. Its Treynor Ratio is 2.6 while SHY’s R-squared is 39.11. Furthermore, the fund has a Sharpe Ratio of 0.54 and a Standard Deviation of 0.89.
The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a R-squared of 88.76 with a Mean Return of 1.05 and a Sharpe Ratio of 0.75. Its Standard Deviation is 15.98 while VOE’s Treynor Ratio is 10.19. Furthermore, the fund has a Alpha of -3.77 and a Beta of 1.11.
SHY’s Mean Return is 0.96 points lower than that of VOE and its R-squared is 49.65 points lower. With a Standard Deviation of 0.89, SHY is slightly less volatile than VOE. The Alpha and Beta of SHY are 3.74 points higher and 0.93 points lower than VOE’s Alpha and Beta.
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SHY had its best year in 2019 with an annual return of 3.42%. SHY’s worst year over the past decade yielded 0.23% and occurred in 2013. In most years the iShares 1-3 Year Treasury Bond ETF provided moderate returns such as in 2014, 2016, and 2011 where annual returns amounted to 0.48%, 0.75%, and 1.43% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in SHY would have resulted in a final balance of $11,486. This is a profit of $1,486 over 11 years and amounts to a compound annual growth rate (CAGR) of 1.27%.
With a $10,000 investment in VOE, the end total would have been $33,655. This equates to a $23,655 profit over 11 years and a compound annual growth rate (CAGR) of 12.52%.
SHY’s CAGR is 11.25 percentage points lower than that of VOE and as a result, would have yielded $22,169 less on a $10,000 investment. Thus, SHY performed worse than VOE by 11.25% annually.
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