The Vanguard Small-Cap Index Fund ETF Shares (VB) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between VB and VBK? And which fund is better?
The expense ratio of VB is 0.02 percentage points lower than VBK’s (0.05% vs. 0.07%). VB also has a lower exposure to the technology sector and a lower standard deviation. Overall, VB has provided lower returns than VBK over the past ten years.
In this article, we’ll compare VB vs. VBK. We’ll look at performance and risk metrics, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss VB’s and VBK’s industry exposure, holdings, and fund composition and examine how these affect their overall returns.
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|Name||Vanguard Small-Cap Index Fund ETF Shares||Vanguard Small-Cap Growth Index Fund ETF Shares|
|Category||Small Blend||Small Growth|
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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.
VB’s dividend yield is 0.69% higher than that of VBK (1.14% vs. 0.45%). Also, VB yielded on average 2.27% less per year over the past decade (14.25% vs. 16.53%). The expense ratio of VB is 0.02 percentage points lower than VBK’s (0.05% vs. 0.07%).
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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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.
VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.
VB is 11.02% less exposed to the Technology sector than VBK (16.85% vs 27.87%). VB’s exposure to Industrials and Healthcare stocks is 2.92% higher and 8.90% lower respectively (16.11% vs. 13.19% and 14.34% vs. 23.24%). In total, Communication Services, Energy, and Consumer Defensive also make up 1.37% more of the fund’s holdings compared to VBK (10.21% vs. 8.84%).
|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%.
|Charles River Laboratories International Inc||0.78%|
|Fair Isaac Corp||0.57%|
|Bill.com Holdings Inc Ordinary Shares||0.56%|
VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.
Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Beta of 1.21 with a Standard Deviation of 17.82 and a Mean Return of 1.15. Its Alpha is -4.02 while VB’s Treynor Ratio is 10.15. Furthermore, the fund has a Sharpe Ratio of 0.74 and a R-squared of 85.03.
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a R-squared of 80.56 with a Alpha of -2.81 and a Sharpe Ratio of 0.78. Its Standard Deviation is 17.95 while VBK’s Mean Return is 1.22. Furthermore, the fund has a Beta of 1.18 and a Treynor Ratio of 11.18.
VB’s Mean Return is 0.07 points lower than that of VBK and its R-squared is 4.47 points higher. With a Standard Deviation of 17.82, VB is slightly less volatile than VBK. The Alpha and Beta of VB are 1.21 points lower and 0.03 points higher than VBK’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 2013 was the strongest year for VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% 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 VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.
VB’s CAGR is 2.27 percentage points lower than that of VBK and as a result, would have yielded $8,905 less on a $10,000 investment. Thus, VB performed worse than VBK by 2.27% annually.
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