The Vanguard Small-Cap Index Fund ETF Shares (VB) and the Vanguard Extended Market Index Fund ETF Shares (VXF) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and VXF is a Vanguard Mid-Cap Growth fund. So, what’s the difference between VB and VXF? And which fund is better?
The expense ratio of VB is 0.01 percentage points lower than VXF’s (0.05% vs. 0.06%). VB also has a lower exposure to the technology sector and a lower standard deviation. Overall, VB has provided lower returns than VXF over the past ten years.
In this article, we’ll compare VB vs. VXF. We’ll look at portfolio growth and industry exposure, as well as at their annual returns and fund composition. Moreover, I’ll also discuss VB’s and VXF’s holdings, performance, and risk metrics and examine how these affect their overall returns.
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Summary
| VB | VXF | |
| Name | Vanguard Small-Cap Index Fund ETF Shares | Vanguard Extended Market Index Fund ETF Shares |
| Category | Small Blend | Mid-Cap Growth |
| Issuer | Vanguard | Vanguard |
| AUM | 137.72B | 114.53B |
| Avg. Return | 14.25% | 15.47% |
| Div. Yield | 1.14% | 1.19% |
| Expense Ratio | 0.05% | 0.06% |
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 Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.
VB’s dividend yield is 0.05% lower than that of VXF (1.14% vs. 1.19%). Also, VB yielded on average 1.22% less per year over the past decade (14.25% vs. 15.47%). The expense ratio of VB is 0.01 percentage points lower than VXF’s (0.05% vs. 0.06%).
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Fund Composition
Industry Exposure
| VB | VXF | |
| Technology | 16.85% | 23.61% |
| Industrials | 16.11% | 11.31% |
| Energy | 3.67% | 2.46% |
| Communication Services | 2.4% | 7.29% |
| Utilities | 2.19% | 1.65% |
| Healthcare | 14.34% | 15.25% |
| Consumer Defensive | 4.14% | 3.09% |
| Real Estate | 9.56% | 8.16% |
| Financial Services | 13.06% | 12.56% |
| Consumer Cyclical | 13.03% | 11.35% |
| Basic Materials | 4.63% | 3.26% |
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 Extended Market Index Fund ETF Shares (VXF) has the most exposure to the Technology sector at 23.61%. This is followed by Healthcare and Financial Services at 15.25% and 12.56% respectively. Energy (2.46%), Consumer Defensive (3.09%), and Basic Materials (3.26%) only make up 8.81% of the fund’s total assets.
VXF’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Industrials, Consumer Cyclical, and Financial Services stocks at 7.29%, 8.16%, 11.31%, 11.35%, and 12.56%.
VB is 6.76% less exposed to the Technology sector than VXF (16.85% vs 23.61%). VB’s exposure to Industrials and Healthcare stocks is 4.80% higher and 0.91% lower respectively (16.11% vs. 11.31% and 14.34% vs. 15.25%). In total, Communication Services, Energy, and Consumer Defensive also make up 2.63% less of the fund’s holdings compared to VXF (10.21% vs. 12.84%).
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%.
| VXF Holdings | Weight |
| Square Inc A | 1.2% |
| Zoom Video Communications Inc | 1.04% |
| Uber Technologies Inc | 0.93% |
| Moderna Inc | 0.9% |
| Blackstone Group Inc | 0.83% |
| Snap Inc Class A | 0.8% |
| Twilio Inc A | 0.73% |
| DocuSign Inc | 0.68% |
| CrowdStrike Holdings Inc Class A | 0.63% |
| Marvell Technology Inc | 0.6% |
VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.
Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.
Risk Analysis
| VB | VXF | |
| Mean Return | 1.15 | 1.24 |
| R-squared | 85.03 | 85.73 |
| Std. Deviation | 17.82 | 18.04 |
| Alpha | -4.02 | -3.26 |
| Beta | 1.21 | 1.23 |
| Sharpe Ratio | 0.74 | 0.79 |
| Treynor Ratio | 10.15 | 10.92 |
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Treynor Ratio of 10.15 with a Alpha of -4.02 and a Mean Return of 1.15. Its R-squared is 85.03 while VB’s Standard Deviation is 17.82. Furthermore, the fund has a Sharpe Ratio of 0.74 and a Beta of 1.21.
The Vanguard Extended Market Index Fund ETF Shares (VXF) has a Treynor Ratio of 10.92 with a R-squared of 85.73 and a Standard Deviation of 18.04. Its Alpha is -3.26 while VXF’s Sharpe Ratio is 0.79. Furthermore, the fund has a Mean Return of 1.24 and a Beta of 1.23.
VB’s Mean Return is 0.09 points lower than that of VXF and its R-squared is 0.70 points lower. With a Standard Deviation of 17.82, VB is slightly less volatile than VXF. The Alpha and Beta of VB are 0.76 points lower and 0.02 points lower than VXF’s Alpha and Beta.
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Performance
Annual Returns
| Year | VB | VXF |
| 2020 | 19.08% | 32.19% |
| 2019 | 27.37% | 28.04% |
| 2018 | -9.3% | -9.37% |
| 2017 | 16.24% | 18.1% |
| 2016 | 18.31% | 16.16% |
| 2015 | -3.65% | -3.26% |
| 2014 | 7.51% | 7.55% |
| 2013 | 37.8% | 38.37% |
| 2012 | 18.22% | 18.48% |
| 2011 | -2.68% | -3.61% |
| 2010 | 27.89% | 27.55% |
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 VXF, returning 38.37% on an annual basis. The poorest year for VXF in the last ten years was 2018, with a yield of -9.37%. Most years the Vanguard Extended Market Index Fund ETF Shares has given investors modest returns, such as in 2016, 2017, and 2012, when gains were 16.16%, 18.1%, and 18.48% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VB | $10,000 | $39,734 | 14.25% |
| VXF | $10,000 | $44,130 | 15.47% |
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 VXF, the end total would have been $44,130. This equates to a $34,130 profit over 11 years and a compound annual growth rate (CAGR) of 15.47%.
VB’s CAGR is 1.22 percentage points lower than that of VXF and as a result, would have yielded $4,396 less on a $10,000 investment. Thus, VB performed worse than VXF by 1.22% annually.
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