The Vanguard Small-Cap Index Fund ETF Shares (VB) and the iShares S&P 500 Value ETF (IVE) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and IVE is a iShares Large Value fund. So, what’s the difference between VB and IVE? And which fund is better?
The expense ratio of VB is 0.13 percentage points lower than IVE’s (0.05% vs. 0.18%). VB also has a higher exposure to the technology sector and a higher standard deviation. Overall, VB has provided higher returns than IVE over the past ten years.
In this article, we’ll compare VB vs. IVE. We’ll look at portfolio growth and fund composition, as well as at their performance and risk metrics. Moreover, I’ll also discuss VB’s and IVE’s holdings, annual returns, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Index Fund ETF Shares||iShares S&P 500 Value 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 S&P 500 Value ETF (IVE) is a Large Value fund that is issued by iShares. It currently has 22.4B total assets under management and has yielded an average annual return of 11.68% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.18%.
VB’s dividend yield is 0.74% lower than that of IVE (1.14% vs. 1.88%). Also, VB yielded on average 2.57% more per year over the past decade (14.25% vs. 11.68%). The expense ratio of VB is 0.13 percentage points lower than IVE’s (0.05% vs. 0.18%).
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 S&P 500 Value ETF (IVE) has the most exposure to the Financial Services sector at 22.06%. This is followed by Healthcare and Industrials at 15.4% and 12.19% respectively. Real Estate (4.38%), Utilities (4.82%), and Energy (5.43%) only make up 14.63% of the fund’s total assets.
IVE’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Consumer Defensive, Technology, and Industrials stocks at 6.4%, 7.68%, 9.23%, 9.41%, and 12.19%.
VB is 7.44% more exposed to the Technology sector than IVE (16.85% vs 9.41%). VB’s exposure to Industrials and Healthcare stocks is 3.92% higher and 1.06% lower respectively (16.11% vs. 12.19% and 14.34% vs. 15.4%). In total, Communication Services, Energy, and Consumer Defensive also make up 10.85% less of the fund’s holdings compared to IVE (10.21% vs. 21.06%).
|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%.
|Berkshire Hathaway Inc Class B||3.05%|
|JPMorgan Chase & Co||2.65%|
|The Walt Disney Co||1.85%|
|Bank of America Corp||1.67%|
|Johnson & Johnson||1.57%|
|Exxon Mobil Corp||1.41%|
|Cisco Systems Inc||1.35%|
|Verizon Communications Inc||1.33%|
IVE’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, The Walt Disney Co, Bank of America Corp, and Johnson & Johnson at 3.05%, 2.65%, 1.85%, 1.67%, and 1.57%.
Exxon Mobil Corp (1.41%), Pfizer Inc (1.38%), and Cisco Systems Inc (1.35%) have a slightly smaller but still significant weight. Verizon Communications Inc and Intel Corp are also represented in the IVE’s holdings at 1.33% and 1.25%.
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Standard Deviation of 17.82 with a Mean Return of 1.15 and a Alpha of -4.02. Its Sharpe Ratio is 0.74 while VB’s Beta is 1.21. Furthermore, the fund has a Treynor Ratio of 10.15 and a R-squared of 85.03.
The iShares S&P 500 Value ETF (IVE) has a R-squared of 92.08 with a Standard Deviation of 14.3 and a Sharpe Ratio of 0.83. Its Beta is 1.01 while IVE’s Alpha is -2.9. Furthermore, the fund has a Treynor Ratio of 11.41 and a Mean Return of 1.05.
VB’s Mean Return is 0.10 points higher than that of IVE and its R-squared is 7.05 points lower. With a Standard Deviation of 17.82, VB is slightly more volatile than IVE. The Alpha and Beta of VB are 1.12 points lower and 0.20 points higher than IVE’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 IVE, returning 31.71% on an annual basis. The poorest year for IVE in the last ten years was 2018, with a yield of -9.09%. Most years the iShares S&P 500 Value ETF has given investors modest returns, such as in 2014, 2010, and 2017, when gains were 12.14%, 14.9%, and 15.19% 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 IVE, the end total would have been $31,350. This equates to a $21,350 profit over 11 years and a compound annual growth rate (CAGR) of 11.68%.
VB’s CAGR is 2.57 percentage points higher than that of IVE and as a result, would have yielded $8,384 more on a $10,000 investment. Thus, VB outperformed IVE by 2.57% annually.
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