The Vanguard Small-Cap Index Fund ETF Shares (VB) and the iShares Gold Trust (IAU) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and IAU is a iShares N/A fund. So, what’s the difference between VB and IAU? And which fund is better?
The expense ratio of VB is 0.20 percentage points lower than IAU’s (0.05% vs. 0.25%). VB also has a higher exposure to the technology sector and a higher standard deviation. Overall, VB has provided higher returns than IAU over the past ten years.
In this article, we’ll compare VB vs. IAU. We’ll look at portfolio growth and risk metrics, as well as at their fund composition and industry exposure. Moreover, I’ll also discuss VB’s and IAU’s annual returns, performance, and holdings and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Index Fund ETF Shares||iShares Gold Trust|
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 Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.
VB’s dividend yield is 1.14% higher than that of IAU (1.14% vs. 0.0%). Also, VB yielded on average 8.22% more per year over the past decade (14.25% vs. 6.03%). The expense ratio of VB is 0.20 percentage points lower than IAU’s (0.05% vs. 0.25%).
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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 Gold Trust (IAU) has the most exposure to the Technology sector at 0.0%. This is followed by Industrials and Energy at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.
IAU’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Energy stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
VB is 16.85% more exposed to the Technology sector than IAU (16.85% vs 0.0%). VB’s exposure to Industrials and Healthcare stocks is 16.11% higher and 14.34% higher respectively (16.11% vs. 0.0% and 14.34% vs. 0.0%). In total, Communication Services, Energy, and Consumer Defensive also make up 10.21% more of the fund’s holdings compared to IAU (10.21% vs. 0.00%).
|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%.
IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.
N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.
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The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Beta of 1.21 with a Alpha of -4.02 and a Treynor Ratio of 10.15. Its R-squared is 85.03 while VB’s Sharpe Ratio is 0.74. Furthermore, the fund has a Standard Deviation of 17.82 and a Mean Return of 1.15.
The iShares Gold Trust (IAU) has a Treynor Ratio of 1.5 with a Mean Return of 0.23 and a Beta of 0.48. Its Sharpe Ratio is 0.13 while IAU’s Alpha is 4.16. Furthermore, the fund has a R-squared of 16.03 and a Standard Deviation of 16.97.
VB’s Mean Return is 0.92 points higher than that of IAU and its R-squared is 69.00 points higher. With a Standard Deviation of 17.82, VB is slightly more volatile than IAU. The Alpha and Beta of VB are 8.18 points lower and 0.73 points higher than IAU’s Alpha and Beta.
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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 2010 was the strongest year for IAU, returning 27.93% on an annual basis. The poorest year for IAU in the last ten years was 2013, with a yield of -27.96%. Most years the iShares Gold Trust has given investors modest returns, such as in 2012, 2011, and 2016, when gains were 8.37%, 8.66%, and 8.85% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 IAU, the end total would have been $16,786. This equates to a $6,786 profit over 11 years and a compound annual growth rate (CAGR) of 6.03%.
VB’s CAGR is 8.22 percentage points higher than that of IAU and as a result, would have yielded $22,948 more on a $10,000 investment. Thus, VB outperformed IAU by 8.22% annually.
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