The Vanguard Small-Cap Index Fund ETF Shares (VB) and the iShares Core Dividend Growth ETF (DGRO) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and DGRO is a iShares Large Value fund. So, what’s the difference between VB and DGRO? And which fund is better?
The expense ratio of VB is 0.03 percentage points lower than DGRO’s (0.05% vs. 0.08%). VB also has a lower exposure to the technology sector and a higher standard deviation. Overall, VB has provided higher returns than DGRO over the past ten years.
In this article, we’ll compare VB vs. DGRO. We’ll look at portfolio growth and annual returns, as well as at their performance and holdings. Moreover, I’ll also discuss VB’s and DGRO’s risk metrics, industry exposure, and fund composition and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Index Fund ETF Shares||iShares Core Dividend Growth ETF|
|Category||Small Blend||Large Value|
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 iShares Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.
VB’s dividend yield is 0.90% lower than that of DGRO (1.14% vs. 2.04%). Also, VB yielded on average 1.80% more per year over the past decade (14.25% vs. 12.46%). The expense ratio of VB is 0.03 percentage points lower than DGRO’s (0.05% vs. 0.08%).
The Vanguard Small-Cap Index Fund ETF Shares (VB) has the most exposure to the Technology sector at 16.85%. This is followed by Industrials and Healthcare at 16.11% and 14.34% respectively. Communication Services (2.4%), Energy (3.67%), and Consumer Defensive (4.14%) only make up 10.21% of the fund’s total assets.
VB’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Healthcare stocks at 4.63%, 9.56%, 13.03%, 13.06%, and 14.34%.
The iShares Core Dividend Growth ETF (DGRO) has the most exposure to the Technology sector at 18.98%. This is followed by Financial Services and Healthcare at 18.47% and 17.55% respectively. Energy (0.11%), Basic Materials (2.83%), and Communication Services (4.53%) only make up 7.47% of the fund’s total assets.
DGRO’s mid-section with moderate exposure is comprised of Utilities, Consumer Cyclical, Consumer Defensive, Industrials, and Healthcare stocks at 7.34%, 7.42%, 10.24%, 12.52%, and 17.55%.
VB is 2.13% less exposed to the Technology sector than DGRO (16.85% vs 18.98%). VB’s exposure to Industrials and Healthcare stocks is 3.59% higher and 3.21% lower respectively (16.11% vs. 12.52% and 14.34% vs. 17.55%). In total, Communication Services, Energy, and Consumer Defensive also make up 4.67% less of the fund’s holdings compared to DGRO (10.21% vs. 14.88%).
|Charles River Laboratories International Inc||0.34%|
|Diamondback Energy Inc||0.31%|
|VICI Properties Inc Ordinary Shares||0.3%|
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%.
|Johnson & Johnson||2.87%|
|Procter & Gamble Co||2.79%|
|Verizon Communications Inc||2.68%|
|JPMorgan Chase & Co||2.57%|
|The Home Depot Inc||2.35%|
|Merck & Co Inc||2.11%|
|Cisco Systems Inc||1.98%|
DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.
Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Standard Deviation of 17.82 with a Beta of 1.21 and a Alpha of -4.02. Its R-squared is 85.03 while VB’s Treynor Ratio is 10.15. Furthermore, the fund has a Sharpe Ratio of 0.74 and a Mean Return of 1.15.
The iShares Core Dividend Growth ETF (DGRO) has a Mean Return of 0 with a Standard Deviation of 0 and a R-squared of 0. Its Beta is 0 while DGRO’s Treynor Ratio is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Alpha of 0.
VB’s Mean Return is 1.15 points higher than that of DGRO and its R-squared is 85.03 points higher. With a Standard Deviation of 17.82, VB is slightly more volatile than DGRO. The Alpha and Beta of VB are 4.02 points lower and 1.21 points higher than DGRO’s Alpha and Beta.
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 2019 was the strongest year for DGRO, returning 30.02% on an annual basis. The poorest year for DGRO in the last ten years was 2018, with a yield of -2.24%. Most years the iShares Core Dividend Growth ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VB would have resulted in a final balance of $18,228. This is a profit of $8,228 over 6 years and amounts to a compound annual growth rate (CAGR) of 14.25%.
With a $10,000 investment in DGRO, the end total would have been $19,580. This equates to a $9,580 profit over 6 years and a compound annual growth rate (CAGR) of 12.46%.
VB’s CAGR is 1.80 percentage points higher than that of DGRO and as a result, would have yielded $1,352 less on a $10,000 investment. Thus, VB outperformed DGRO by 1.80% annually.
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