The Vanguard Small-Cap Index Fund ETF Shares (VB) and the Vanguard Small-Cap Value Index Fund ETF Shares (VBR) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and VBR is a Vanguard Small Value fund. So, what’s the difference between VB and VBR? And which fund is better?
The expense ratio of VB is 0.02 percentage points lower than VBR’s (0.05% vs. 0.07%). VB also has a higher exposure to the technology sector and a lower standard deviation. Overall, VB has provided higher returns than VBR over the past ten years.
In this article, we’ll compare VB vs. VBR. We’ll look at risk metrics and portfolio growth, as well as at their industry exposure and annual returns. Moreover, I’ll also discuss VB’s and VBR’s holdings, performance, and fund composition and examine how these affect their overall returns.
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Summary
| VB | VBR | |
| Name | Vanguard Small-Cap Index Fund ETF Shares | Vanguard Small-Cap Value Index Fund ETF Shares |
| Category | Small Blend | Small Value |
| Issuer | Vanguard | Vanguard |
| AUM | 137.72B | 48.08B |
| Avg. Return | 14.25% | 12.28% |
| Div. Yield | 1.14% | 1.6% |
| Expense Ratio | 0.05% | 0.07% |
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 Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.
VB’s dividend yield is 0.46% lower than that of VBR (1.14% vs. 1.6%). Also, VB yielded on average 1.97% more per year over the past decade (14.25% vs. 12.28%). The expense ratio of VB is 0.02 percentage points lower than VBR’s (0.05% vs. 0.07%).
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Fund Composition
Industry Exposure
| VB | VBR | |
| Technology | 16.85% | 8.39% |
| Industrials | 16.11% | 18.44% |
| Energy | 3.67% | 5.15% |
| Communication Services | 2.4% | 1.77% |
| Utilities | 2.19% | 3.65% |
| Healthcare | 14.34% | 7.16% |
| Consumer Defensive | 4.14% | 4.36% |
| Real Estate | 9.56% | 10.92% |
| Financial Services | 13.06% | 20.04% |
| Consumer Cyclical | 13.03% | 13.82% |
| Basic Materials | 4.63% | 6.31% |
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 Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.
VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.
VB is 8.46% more exposed to the Technology sector than VBR (16.85% vs 8.39%). VB’s exposure to Industrials and Healthcare stocks is 2.33% lower and 7.18% higher respectively (16.11% vs. 18.44% and 14.34% vs. 7.16%). In total, Communication Services, Energy, and Consumer Defensive also make up 1.07% less of the fund’s holdings compared to VBR (10.21% vs. 11.28%).
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%.
| VBR Holdings | Weight |
| Diamondback Energy Inc | 0.55% |
| VICI Properties Inc Ordinary Shares | 0.54% |
| IDEX Corp | 0.54% |
| Nuance Communications Inc | 0.5% |
| Molina Healthcare Inc | 0.48% |
| Signature Bank | 0.46% |
| Novavax Inc | 0.44% |
| Howmet Aerospace Inc | 0.44% |
| Apollo Global Management Inc Class A | 0.42% |
| Brown & Brown Inc | 0.41% |
VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.
Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.
Risk Analysis
| VB | VBR | |
| Mean Return | 1.15 | 1.08 |
| R-squared | 85.03 | 82.2 |
| Std. Deviation | 17.82 | 18.37 |
| Alpha | -4.02 | -5.09 |
| Beta | 1.21 | 1.23 |
| Sharpe Ratio | 0.74 | 0.67 |
| Treynor Ratio | 10.15 | 9.15 |
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Beta of 1.21 with a Mean Return of 1.15 and a Sharpe Ratio of 0.74. Its Alpha is -4.02 while VB’s Treynor Ratio is 10.15. Furthermore, the fund has a R-squared of 85.03 and a Standard Deviation of 17.82.
The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a R-squared of 82.2 with a Standard Deviation of 18.37 and a Mean Return of 1.08. Its Sharpe Ratio is 0.67 while VBR’s Alpha is -5.09. Furthermore, the fund has a Treynor Ratio of 9.15 and a Beta of 1.23.
VB’s Mean Return is 0.07 points higher than that of VBR and its R-squared is 2.83 points higher. With a Standard Deviation of 17.82, VB is slightly less volatile than VBR. The Alpha and Beta of VB are 1.07 points higher and 0.02 points lower than VBR’s Alpha and Beta.
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Performance
Annual Returns
| Year | VB | VBR |
| 2020 | 19.08% | 5.82% |
| 2019 | 27.37% | 22.76% |
| 2018 | -9.3% | -12.22% |
| 2017 | 16.24% | 11.79% |
| 2016 | 18.31% | 24.8% |
| 2015 | -3.65% | -4.67% |
| 2014 | 7.51% | 10.55% |
| 2013 | 37.8% | 36.57% |
| 2012 | 18.22% | 18.78% |
| 2011 | -2.68% | -4.05% |
| 2010 | 27.89% | 24.97% |
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 VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VB | $10,000 | $39,734 | 14.25% |
| VBR | $10,000 | $32,611 | 12.28% |
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 VBR, the end total would have been $32,611. This equates to a $22,611 profit over 11 years and a compound annual growth rate (CAGR) of 12.28%.
VB’s CAGR is 1.97 percentage points higher than that of VBR and as a result, would have yielded $7,123 more on a $10,000 investment. Thus, VB outperformed VBR by 1.97% annually.
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