The Vanguard Small-Cap Index Fund ETF Shares (VB) and the iShares MSCI USA Value Factor ETF (VLUE) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and VLUE is a iShares Large Value fund. So, what’s the difference between VB and VLUE? And which fund is better?
The expense ratio of VB is 0.10 percentage points lower than VLUE’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 VLUE over the past ten years.
In this article, we’ll compare VB vs. VLUE. We’ll look at risk metrics and performance, as well as at their holdings and fund composition. Moreover, I’ll also discuss VB’s and VLUE’s industry exposure, portfolio growth, and annual returns and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Index Fund ETF Shares||iShares MSCI USA Value Factor 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 MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.
VB’s dividend yield is 0.75% lower than that of VLUE (1.14% vs. 1.89%). Also, VB yielded on average 5.34% more per year over the past decade (14.25% vs. 8.91%). The expense ratio of VB is 0.10 percentage points lower than VLUE’s (0.05% vs. 0.15%).
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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 iShares MSCI USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.
VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.
VB is 10.04% less exposed to the Technology sector than VLUE (16.85% vs 26.89%). VB’s exposure to Industrials and Healthcare stocks is 6.97% higher and 0.03% higher respectively (16.11% vs. 9.14% and 14.34% vs. 14.31%). In total, Communication Services, Energy, and Consumer Defensive also make up 9.82% less of the fund’s holdings compared to VLUE (10.21% vs. 20.03%).
|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%.
|General Motors Co||3.19%|
|Micron Technology Inc||3.14%|
|Cisco Systems Inc||3.05%|
|International Business Machines Corp||2.76%|
|Ford Motor Co||2.23%|
VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.
International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.
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The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Mean Return of 1.15 with a R-squared of 85.03 and a Treynor Ratio of 10.15. Its Beta is 1.21 while VB’s Standard Deviation is 17.82. Furthermore, the fund has a Alpha of -4.02 and a Sharpe Ratio of 0.74.
The iShares MSCI USA Value Factor ETF (VLUE) has a Sharpe Ratio of 0 with a Treynor Ratio of 0 and a R-squared of 0. Its Alpha is 0 while VLUE’s Mean Return is 0. Furthermore, the fund has a Standard Deviation of 0 and a Beta of 0.
VB’s Mean Return is 1.15 points higher than that of VLUE and its R-squared is 85.03 points higher. With a Standard Deviation of 17.82, VB is slightly more volatile than VLUE. The Alpha and Beta of VB are 4.02 points lower and 1.21 points higher than VLUE’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 2019 was the strongest year for VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VB would have resulted in a final balance of $19,597. This is a profit of $9,597 over 7 years and amounts to a compound annual growth rate (CAGR) of 14.25%.
With a $10,000 investment in VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.
VB’s CAGR is 5.34 percentage points higher than that of VLUE and as a result, would have yielded $2,350 more on a $10,000 investment. Thus, VB outperformed VLUE by 5.34% annually.
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