VBR vs. DGRO: What’s The Difference?

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) and the iShares Core Dividend Growth ETF (DGRO) are both among the Top 100 ETFs. VBR is a Vanguard Small Value fund and DGRO is a iShares Large Value fund. So, what’s the difference between VBR and DGRO? And which fund is better?

The expense ratio of VBR is 0.01 percentage points lower than DGRO’s (0.07% vs. 0.08%). VBR also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VBR has provided lower returns than DGRO over the past 6 years.

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

Summary

VBR DGRO
Name Vanguard Small-Cap Value Index Fund ETF Shares iShares Core Dividend Growth ETF
Category Small Value Large Value
Issuer Vanguard iShares
AUM 48.08B 20B
Avg. Return 12.28% 12.46%
Div. Yield 1.6% 2.04%
Expense Ratio 0.07% 0.08%

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%.

The iShares Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.

VBR’s dividend yield is 0.44% lower than that of DGRO (1.6% vs. 2.04%). Also, VBR yielded on average 0.17% less per year over the past decade (12.28% vs. 12.46%). The expense ratio of VBR is 0.01 percentage points lower than DGRO’s (0.07% vs. 0.08%).

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Fund Composition

Industry Exposure

VBR vs. DGRO - Industry Exposure

VBR DGRO
Technology 8.39% 18.98%
Industrials 18.44% 12.52%
Energy 5.15% 0.11%
Communication Services 1.77% 4.53%
Utilities 3.65% 7.34%
Healthcare 7.16% 17.55%
Consumer Defensive 4.36% 10.24%
Real Estate 10.92% 0.0%
Financial Services 20.04% 18.47%
Consumer Cyclical 13.82% 7.42%
Basic Materials 6.31% 2.83%

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%.

The iShares Core Dividend Growth ETF (DGRO) has the most exposure to the Technology sector at 18.98%. This is followed by Financial Services and Healthcare at 18.47% and 17.55% respectively. Energy (0.11%), Basic Materials (2.83%), and Communication Services (4.53%) only make up 7.47% of the fund’s total assets.

DGRO’s mid-section with moderate exposure is comprised of Utilities, Consumer Cyclical, Consumer Defensive, Industrials, and Healthcare stocks at 7.34%, 7.42%, 10.24%, 12.52%, and 17.55%.

VBR is 1.57% more exposed to the Financial Services sector than DGRO (20.04% vs 18.47%). VBR’s exposure to Industrials and Consumer Cyclical stocks is 5.92% higher and 6.40% higher respectively (18.44% vs. 12.52% and 13.82% vs. 7.42%). In total, Utilities, Consumer Defensive, and Energy also make up 4.53% less of the fund’s holdings compared to DGRO (13.16% vs. 17.69%).

Holdings

VBR - Holdings

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%.

DGRO - Holdings

DGRO Holdings Weight
Microsoft Corp 3.29%
Apple Inc 3.26%
Pfizer Inc 2.89%
Johnson & Johnson 2.87%
Procter & Gamble Co 2.79%
Verizon Communications Inc 2.68%
JPMorgan Chase & Co 2.57%
The Home Depot Inc 2.35%
Merck & Co Inc 2.11%
Cisco Systems Inc 1.98%

DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.

Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.

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Risk Analysis

VBR DGRO
Mean Return 1.08 0
R-squared 82.2 0
Std. Deviation 18.37 0
Alpha -5.09 0
Beta 1.23 0
Sharpe Ratio 0.67 0
Treynor Ratio 9.15 0

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Standard Deviation of 18.37 with a Sharpe Ratio of 0.67 and a Treynor Ratio of 9.15. Its Alpha is -5.09 while VBR’s Beta is 1.23. Furthermore, the fund has a Mean Return of 1.08 and a R-squared of 82.2.

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

VBR’s Mean Return is 1.08 points higher than that of DGRO and its R-squared is 82.20 points higher. With a Standard Deviation of 18.37, VBR is slightly more volatile than DGRO. The Alpha and Beta of VBR are 5.09 points lower and 1.23 points higher than DGRO’s Alpha and Beta.

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Performance

Annual Returns

VBR vs. DGRO - Annual Returns

Year VBR DGRO
2020 5.82% 9.47%
2019 22.76% 30.02%
2018 -12.22% -2.24%
2017 11.79% 22.84%
2016 24.8% 15.27%
2015 -4.67% -0.62%
2014 10.55% 0.0%
2013 36.57% 0.0%
2012 18.78% 0.0%
2011 -4.05% 0.0%
2010 24.97% 0.0%

VBR had its best year in 2013 with an annual return of 36.57%. VBR’s worst year over the past decade yielded -12.22% and occurred in 2018. In most years the Vanguard Small-Cap Value Index Fund ETF Shares provided moderate returns such as in 2014, 2017, and 2012 where annual returns amounted to 10.55%, 11.79%, and 18.78% respectively.

The year 2019 was the strongest year for DGRO, returning 30.02% on an annual basis. The poorest year for DGRO in the last ten years was 2018, with a yield of -2.24%. Most years the iShares Core Dividend Growth ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

VBR vs. DGRO - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VBR $10,000 $15,165 12.28%
DGRO $10,000 $19,580 12.46%

A $10,000 investment in VBR would have resulted in a final balance of $15,165. This is a profit of $5,165 over 6 years and amounts to a compound annual growth rate (CAGR) of 12.28%.

With a $10,000 investment in DGRO, the end total would have been $19,580. This equates to a $9,580 profit over 6 years and a compound annual growth rate (CAGR) of 12.46%.

VBR’s CAGR is 0.17 percentage points lower than that of DGRO and as a result, would have yielded $4,415 less on a $10,000 investment. Thus, VBR performed worse than DGRO by 0.17% annually.


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