The Vanguard Small-Cap Index Fund ETF Shares (VB) and the iShares MSCI USA Min Vol Factor ETF (USMV) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and USMV is a iShares Large Blend fund. So, what’s the difference between VB and USMV? And which fund is better?
The expense ratio of VB is 0.10 percentage points lower than USMV’s (0.05% vs. 0.15%). VB also has a lower exposure to the technology sector and a higher standard deviation. Overall, VB has provided higher returns than USMV over the past ten years.
In this article, we’ll compare VB vs. USMV. We’ll look at portfolio growth and fund composition, as well as at their holdings and risk metrics. Moreover, I’ll also discuss VB’s and USMV’s annual returns, performance, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Index Fund ETF Shares||iShares MSCI USA Min Vol Factor ETF|
|Category||Small Blend||Large Blend|
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 MSCI USA Min Vol Factor ETF (USMV) is a Large Blend fund that is issued by iShares. It currently has 27.6B total assets under management and has yielded an average annual return of 13.89% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.
VB’s dividend yield is 0.36% lower than that of USMV (1.14% vs. 1.5%). Also, VB yielded on average 0.36% more per year over the past decade (14.25% vs. 13.89%). The expense ratio of VB is 0.10 percentage points lower than USMV’s (0.05% vs. 0.15%).
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 MSCI USA Min Vol Factor ETF (USMV) has the most exposure to the Technology sector at 20.53%. This is followed by Healthcare and Consumer Defensive at 18.42% and 12.82% respectively. Basic Materials (1.65%), Real Estate (2.73%), and Consumer Cyclical (5.53%) only make up 9.91% of the fund’s total assets.
USMV’s mid-section with moderate exposure is comprised of Utilities, Financial Services, Industrials, Communication Services, and Consumer Defensive stocks at 6.93%, 9.65%, 10.51%, 11.03%, and 12.82%.
VB is 3.68% less exposed to the Technology sector than USMV (16.85% vs 20.53%). VB’s exposure to Industrials and Healthcare stocks is 5.60% higher and 4.08% lower respectively (16.11% vs. 10.51% and 14.34% vs. 18.42%). In total, Communication Services, Energy, and Consumer Defensive also make up 13.85% less of the fund’s holdings compared to USMV (10.21% vs. 24.06%).
|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%.
|Eli Lilly and Co||1.64%|
|T-Mobile US Inc||1.51%|
|Accenture PLC Class A||1.51%|
|Visa Inc Class A||1.49%|
|Waste Management Inc||1.45%|
|The Kroger Co||1.44%|
|Johnson & Johnson||1.42%|
|Gilead Sciences Inc||1.42%|
USMV’s Top Holdings are Eli Lilly and Co, Microsoft Corp, T-Mobile US Inc, Accenture PLC Class A, and Visa Inc Class A at 1.64%, 1.62%, 1.51%, 1.51%, and 1.49%.
Waste Management Inc (1.45%), Adobe Inc (1.45%), and The Kroger Co (1.44%) have a slightly smaller but still significant weight. Johnson & Johnson and Gilead Sciences Inc are also represented in the USMV’s holdings at 1.42% and 1.42%.
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 R-squared of 85.03. Its Treynor Ratio is 10.15 while VB’s Beta is 1.21. Furthermore, the fund has a Sharpe Ratio of 0.74 and a Alpha of -4.02.
The iShares MSCI USA Min Vol Factor ETF (USMV) has a Alpha of 0 with a Standard Deviation of 0 and a Sharpe Ratio of 0. Its Beta is 0 while USMV’s R-squared is 0. Furthermore, the fund has a Mean Return of 0 and a Treynor Ratio of 0.
VB’s Mean Return is 1.15 points higher than that of USMV and its R-squared is 85.03 points higher. With a Standard Deviation of 17.82, VB is slightly more volatile than USMV. The Alpha and Beta of VB are 4.02 points lower and 1.21 points higher than USMV’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 USMV, returning 27.77% on an annual basis. The poorest year for USMV in the last ten years was 2011, with a yield of 0.0%. Most years the iShares MSCI USA Min Vol Factor ETF has given investors modest returns, such as in 2020, 2016, and 2012, when gains were 5.6%, 10.5%, and 11.04% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VB would have resulted in a final balance of $27,004. This is a profit of $17,004 over 8 years and amounts to a compound annual growth rate (CAGR) of 14.25%.
With a $10,000 investment in USMV, the end total would have been $27,607. This equates to a $17,607 profit over 8 years and a compound annual growth rate (CAGR) of 13.89%.
VB’s CAGR is 0.36 percentage points higher than that of USMV and as a result, would have yielded $603 less on a $10,000 investment. Thus, VB outperformed USMV by 0.36% annually.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.