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VBK vs. IUSB: What’s The Difference?

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. VBK is a Vanguard Small Growth fund and IUSB is a iShares N/A fund. So, what’s the difference between VBK and IUSB? And which fund is better?

The expense ratio of VBK is 0.01 percentage points higher than IUSB’s (0.07% vs. 0.06%). VBK also has a high exposure to the technology sector while IUSB is mostly comprised of AAA bonds. Overall, VBK has provided higher returns than IUSB over the past 6 years.

In this article, we’ll compare VBK vs. IUSB. We’ll look at risk metrics and holdings, as well as at their performance and industry exposure. Moreover, I’ll also discuss VBK’s and IUSB’s fund composition, annual returns, and portfolio growth and examine how these affect their overall returns.

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Summary

VBKIUSB
NameVanguard Small-Cap Growth Index Fund ETF SharesiShares Core Total USD Bond Market ETF
CategorySmall GrowthN/A
IssuerVanguardiShares
AUM37.89B14.49B
Avg. Return16.53%4.13%
Div. Yield0.45%2.1%
Expense Ratio0.07%0.06%

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%.

The iShares Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.

VBK’s dividend yield is 1.65% lower than that of IUSB (0.45% vs. 2.1%). Also, VBK yielded on average 12.40% more per year over the past decade (16.53% vs. 4.13%). The expense ratio of VBK is 0.01 percentage points higher than IUSB’s (0.07% vs. 0.06%).

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Fund Composition

Holdings

VBK - Holdings

VBK HoldingsWeight
Charles River Laboratories International Inc0.78%
Pool Corp0.73%
Bio-Techne Corp0.73%
Avantor Inc0.73%
PerkinElmer Inc0.72%
Entegris Inc0.7%
PTC Inc0.62%
Fair Isaac Corp0.57%
Bill.com Holdings Inc Ordinary Shares0.56%
Avalara Inc0.55%

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%.

IUSB - Holdings

IUSB Bond SectorsWeight
AAA58.32%
BBB16.98%
A12.27%
BB4.33%
AA3.36%
B2.8%
Others1.01%
Below B0.92%
US Government0.0%

IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.

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Risk Analysis

VBKIUSB
Mean Return1.220
R-squared80.560
Std. Deviation17.950
Alpha-2.810
Beta1.180
Sharpe Ratio0.780
Treynor Ratio11.180

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Alpha of -2.81 with a Treynor Ratio of 11.18 and a Beta of 1.18. Its Sharpe Ratio is 0.78 while VBK’s Standard Deviation is 17.95. Furthermore, the fund has a R-squared of 80.56 and a Mean Return of 1.22.

The iShares Core Total USD Bond Market ETF (IUSB) has a Alpha of 0 with a R-squared of 0 and a Mean Return of 0. Its Treynor Ratio is 0 while IUSB’s Beta is 0. Furthermore, the fund has a Standard Deviation of 0 and a Sharpe Ratio of 0.

VBK’s Mean Return is 1.22 points higher than that of IUSB and its R-squared is 80.56 points higher. With a Standard Deviation of 17.95, VBK is slightly more volatile than IUSB. The Alpha and Beta of VBK are 2.81 points lower and 1.18 points higher than IUSB’s Alpha and Beta.

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Performance

Annual Returns

VBK vs. IUSB - Annual Returns

YearVBKIUSB
202035.29%7.59%
201932.75%9.26%
2018-5.68%-0.38%
201721.9%4.06%
201610.74%3.78%
2015-2.51%0.46%
20144.02%0.0%
201338.18%0.0%
201217.67%0.0%
2011-1.43%0.0%
201030.87%0.0%

VBK had its best year in 2013 with an annual return of 38.18%. VBK’s worst year over the past decade yielded -5.68% and occurred in 2018. In most years the Vanguard Small-Cap Growth Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2017 where annual returns amounted to 10.74%, 17.67%, and 21.9% respectively.

The year 2019 was the strongest year for IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.

Portfolio Growth

VBK vs. IUSB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VBK$10,000$22,29316.53%
IUSB$10,000$12,7044.13%

A $10,000 investment in VBK would have resulted in a final balance of $22,293. This is a profit of $12,293 over 6 years and amounts to a compound annual growth rate (CAGR) of 16.53%.

With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.

VBK’s CAGR is 12.40 percentage points higher than that of IUSB and as a result, would have yielded $9,589 more on a $10,000 investment. Thus, VBK outperformed IUSB by 12.40% annually.


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