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VB vs. BIV: What’s The Difference?

The Vanguard Small-Cap Index Fund ETF Shares (VB) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between VB and BIV? And which fund is better?

VB and BIV have the same expense ratio: 0.05%. VB also has a high exposure to the technology sector while BIV is mostly comprised of AAA bonds. Overall, VB has provided higher returns than BIV over the past ten years.

In this article, we’ll compare VB vs. BIV. We’ll look at holdings and portfolio growth, as well as at their annual returns and industry exposure. Moreover, I’ll also discuss VB’s and BIV’s fund composition, risk metrics, and performance and examine how these affect their overall returns.

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Summary

VBBIV
NameVanguard Small-Cap Index Fund ETF SharesVanguard Intermediate-Term Bond Index Fund ETF Shares
CategorySmall BlendIntermediate-Term Bond
IssuerVanguardVanguard
AUM137.72B39.05B
Avg. Return14.25%5.31%
Div. Yield1.14%2.06%
Expense Ratio0.05%0.05%

The Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.05%.

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%.

VB’s dividend yield is 0.92% lower than that of BIV (1.14% vs. 2.06%). Also, VB yielded on average 8.94% more per year over the past decade (14.25% vs. 5.31%). VB and BIV have the same expense ratio: 0.05%.

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Fund Composition

Holdings

VB - Holdings

VB HoldingsWeight
Charles River Laboratories International Inc0.34%
Pool Corp0.32%
Bio-Techne Corp0.32%
Avantor Inc0.32%
PerkinElmer Inc0.31%
Diamondback Energy Inc0.31%
VICI Properties Inc Ordinary Shares0.3%
IDEX Corp0.3%
Entegris Inc0.3%
Novavax Inc0.29%

VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.

Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.

BIV - Holdings

BIV Bond SectorsWeight
AAA54.51%
BBB25.24%
A16.97%
AA3.1%
Others0.15%
Below B0.03%
B0.0%
BB0.0%
US Government0.0%

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.

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Risk Analysis

VBBIV
Mean Return1.150.35
R-squared85.0395.12
Std. Deviation17.824.09
Alpha-4.02-0.07
Beta1.211.33
Sharpe Ratio0.740.89
Treynor Ratio10.152.72

The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Treynor Ratio of 10.15 with a Alpha of -4.02 and a Mean Return of 1.15. Its Beta is 1.21 while VB’s Standard Deviation is 17.82. Furthermore, the fund has a Sharpe Ratio of 0.74 and a R-squared of 85.03.

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Beta of 1.33 with a Alpha of -0.07 and a Standard Deviation of 4.09. Its Treynor Ratio is 2.72 while BIV’s Mean Return is 0.35. Furthermore, the fund has a Sharpe Ratio of 0.89 and a R-squared of 95.12.

VB’s Mean Return is 0.80 points higher than that of BIV and its R-squared is 10.09 points lower. With a Standard Deviation of 17.82, VB is slightly more volatile than BIV. The Alpha and Beta of VB are 3.95 points lower and 0.12 points lower than BIV’s Alpha and Beta.

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Performance

Annual Returns

VB vs. BIV - Annual Returns

YearVBBIV
202019.08%9.71%
201927.37%10.19%
2018-9.3%-0.09%
201716.24%3.8%
201618.31%2.86%
2015-3.65%1.23%
20147.51%7.0%
201337.8%-3.44%
201218.22%7.02%
2011-2.68%10.62%
201027.89%9.55%

VB had its best year in 2013 with an annual return of 37.8%. VB’s worst year over the past decade yielded -9.3% and occurred in 2018. In most years the Vanguard Small-Cap Index Fund ETF Shares provided moderate returns such as in 2017, 2012, and 2016 where annual returns amounted to 16.24%, 18.22%, and 18.31% 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

VB vs. BIV - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VB$10,000$39,73414.25%
BIV$10,000$17,4925.31%

A $10,000 investment in VB would have resulted in a final balance of $39,734. This is a profit of $29,734 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.25%.

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%.

VB’s CAGR is 8.94 percentage points higher than that of BIV and as a result, would have yielded $22,242 more on a $10,000 investment. Thus, VB outperformed BIV by 8.94% annually.


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