The Vanguard Small-Cap Index Fund ETF Shares (VB) and the SPDR S&P Dividend ETF (SDY) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and SDY is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between VB and SDY? And which fund is better?
The expense ratio of VB is 0.30 percentage points lower than SDY’s (0.05% vs. 0.35%). VB also has a higher exposure to the technology sector and a higher standard deviation. Overall, VB has provided higher returns than SDY over the past ten years.
In this article, we’ll compare VB vs. SDY. We’ll look at industry exposure and risk metrics, as well as at their portfolio growth and fund composition. Moreover, I’ll also discuss VB’s and SDY’s holdings, performance, and annual returns and examine how these affect their overall returns.
Summary
| VB | SDY | |
| Name | Vanguard Small-Cap Index Fund ETF Shares | SPDR S&P Dividend ETF |
| Category | Small Blend | Large Value |
| Issuer | Vanguard | SPDR State Street Global Advisors |
| AUM | 137.72B | 19.67B |
| Avg. Return | 14.25% | 12.44% |
| Div. Yield | 1.14% | 2.65% |
| Expense Ratio | 0.05% | 0.35% |
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 SPDR S&P Dividend ETF (SDY) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 19.67B total assets under management and has yielded an average annual return of 12.44% over the past 10 years. The fund has a dividend yield of 2.65% with an expense ratio of 0.35%.
VB’s dividend yield is 1.51% lower than that of SDY (1.14% vs. 2.65%). Also, VB yielded on average 1.82% more per year over the past decade (14.25% vs. 12.44%). The expense ratio of VB is 0.30 percentage points lower than SDY’s (0.05% vs. 0.35%).
Fund Composition
Industry Exposure
| VB | SDY | |
| Technology | 16.85% | 2.0% |
| Industrials | 16.11% | 15.89% |
| Energy | 3.67% | 5.95% |
| Communication Services | 2.4% | 4.64% |
| Utilities | 2.19% | 12.14% |
| Healthcare | 14.34% | 7.35% |
| Consumer Defensive | 4.14% | 14.01% |
| Real Estate | 9.56% | 6.57% |
| Financial Services | 13.06% | 16.32% |
| Consumer Cyclical | 13.03% | 8.68% |
| Basic Materials | 4.63% | 6.45% |
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 SPDR S&P Dividend ETF (SDY) has the most exposure to the Financial Services sector at 16.32%. This is followed by Industrials and Consumer Defensive at 15.89% and 14.01% respectively. Communication Services (4.64%), Energy (5.95%), and Basic Materials (6.45%) only make up 17.04% of the fund’s total assets.
SDY’s mid-section with moderate exposure is comprised of Real Estate, Healthcare, Consumer Cyclical, Utilities, and Consumer Defensive stocks at 6.57%, 7.35%, 8.68%, 12.14%, and 14.01%.
VB is 14.85% more exposed to the Technology sector than SDY (16.85% vs 2.0%). VB’s exposure to Industrials and Healthcare stocks is 0.22% higher and 6.99% higher respectively (16.11% vs. 15.89% and 14.34% vs. 7.35%). In total, Communication Services, Energy, and Consumer Defensive also make up 14.39% less of the fund’s holdings compared to SDY (10.21% vs. 24.60%).
Holdings
| VB Holdings | Weight |
| Charles River Laboratories International Inc | 0.34% |
| Pool Corp | 0.32% |
| Bio-Techne Corp | 0.32% |
| Avantor Inc | 0.32% |
| PerkinElmer Inc | 0.31% |
| Diamondback Energy Inc | 0.31% |
| VICI Properties Inc Ordinary Shares | 0.3% |
| IDEX Corp | 0.3% |
| Entegris Inc | 0.3% |
| Novavax Inc | 0.29% |
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%.
| SDY Holdings | Weight |
| Exxon Mobil Corp | 2.81% |
| AT&T Inc | 2.5% |
| South Jersey Industries Inc | 2.22% |
| Chevron Corp | 2.02% |
| International Business Machines Corp | 2.0% |
| AbbVie Inc | 1.93% |
| National Retail Properties Inc | 1.86% |
| Federal Realty Investment Trust | 1.77% |
| Realty Income Corp | 1.7% |
| Old Republic International Corp | 1.65% |
SDY’s Top Holdings are Exxon Mobil Corp, AT&T Inc, South Jersey Industries Inc, Chevron Corp, and International Business Machines Corp at 2.81%, 2.5%, 2.22%, 2.02%, and 2.0%.
AbbVie Inc (1.93%), National Retail Properties Inc (1.86%), and Federal Realty Investment Trust (1.77%) have a slightly smaller but still significant weight. Realty Income Corp and Old Republic International Corp are also represented in the SDY’s holdings at 1.7% and 1.65%.
Risk Analysis
| VB | SDY | |
| Mean Return | 1.15 | 1.07 |
| R-squared | 85.03 | 83.62 |
| Std. Deviation | 17.82 | 12.9 |
| Alpha | -4.02 | -0.1 |
| Beta | 1.21 | 0.87 |
| Sharpe Ratio | 0.74 | 0.95 |
| Treynor Ratio | 10.15 | 13.94 |
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Standard Deviation of 17.82 with a Alpha of -4.02 and a R-squared of 85.03. Its Mean Return is 1.15 while VB’s Sharpe Ratio is 0.74. Furthermore, the fund has a Beta of 1.21 and a Treynor Ratio of 10.15.
The SPDR S&P Dividend ETF (SDY) has a Alpha of -0.1 with a Mean Return of 1.07 and a Sharpe Ratio of 0.95. Its Beta is 0.87 while SDY’s Standard Deviation is 12.9. Furthermore, the fund has a R-squared of 83.62 and a Treynor Ratio of 13.94.
VB’s Mean Return is 0.08 points higher than that of SDY and its R-squared is 1.41 points higher. With a Standard Deviation of 17.82, VB is slightly more volatile than SDY. The Alpha and Beta of VB are 3.92 points lower and 0.34 points higher than SDY’s Alpha and Beta.
Performance
Annual Returns
| Year | VB | SDY |
| 2020 | 19.08% | 1.78% |
| 2019 | 27.37% | 23.37% |
| 2018 | -9.3% | -2.73% |
| 2017 | 16.24% | 15.84% |
| 2016 | 18.31% | 20.17% |
| 2015 | -3.65% | -0.7% |
| 2014 | 7.51% | 13.8% |
| 2013 | 37.8% | 30.09% |
| 2012 | 18.22% | 11.51% |
| 2011 | -2.68% | 7.28% |
| 2010 | 27.89% | 16.41% |
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 2013 was the strongest year for SDY, returning 30.09% on an annual basis. The poorest year for SDY in the last ten years was 2018, with a yield of -2.73%. Most years the SPDR S&P Dividend ETF has given investors modest returns, such as in 2012, 2014, and 2017, when gains were 11.51%, 13.8%, and 15.84% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VB | $10,000 | $39,734 | 14.25% |
| SDY | $10,000 | $34,806 | 12.44% |
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 SDY, the end total would have been $34,806. This equates to a $24,806 profit over 11 years and a compound annual growth rate (CAGR) of 12.44%.
VB’s CAGR is 1.82 percentage points higher than that of SDY and as a result, would have yielded $4,928 more on a $10,000 investment. Thus, VB outperformed SDY by 1.82% annually.
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