The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. VBR is a Vanguard Small Value fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between VBR and EMB? And which fund is better?
The expense ratio of VBR is 0.32 percentage points lower than EMB’s (0.07% vs. 0.39%). VBR also has a high exposure to the financial services sector while EMB is mostly comprised of BBB bonds. Overall, VBR has provided higher returns than EMB over the past 11 years.
In this article, we’ll compare VBR vs. EMB. We’ll look at portfolio growth and fund composition, as well as at their performance and risk metrics. Moreover, I’ll also discuss VBR’s and EMB’s holdings, annual returns, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Value Index Fund ETF Shares||iShares J.P. Morgan USD Emerging Markets Bond ETF|
|Category||Small Value||Emerging Markets Bond|
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 J.P. Morgan USD Emerging Markets Bond ETF (EMB) is a Emerging Markets Bond fund that is issued by iShares. It currently has 19.76B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 3.85% with an expense ratio of 0.39%.
VBR’s dividend yield is 2.25% lower than that of EMB (1.6% vs. 3.85%). Also, VBR yielded on average 5.85% more per year over the past decade (12.28% vs. 6.43%). The expense ratio of VBR is 0.32 percentage points lower than EMB’s (0.07% vs. 0.39%).
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|Diamondback Energy Inc||0.55%|
|VICI Properties Inc Ordinary Shares||0.54%|
|Nuance Communications Inc||0.5%|
|Molina Healthcare Inc||0.48%|
|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%.
|EMB Bond Sectors||Weight|
EMB’s Top Bond Sectors are ratings of BBB, B, BB, A, and AA at 33.79%, 21.97%, 16.92%, 13.67%, and 7.97%. The fund is less weighted towards Below B (4.49%), Others (1.11%), and AAA (0.09%) rated bonds.
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The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Sharpe Ratio of 0.67 with a Treynor Ratio of 9.15 and a Mean Return of 1.08. Its Alpha is -5.09 while VBR’s Standard Deviation is 18.37. Furthermore, the fund has a Beta of 1.23 and a R-squared of 82.2.
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a Mean Return of 0.44 with a Treynor Ratio of 3.24 and a Alpha of 0.89. Its Beta is 1.36 while EMB’s Standard Deviation is 8.44. Furthermore, the fund has a R-squared of 23.34 and a Sharpe Ratio of 0.55.
VBR’s Mean Return is 0.64 points higher than that of EMB and its R-squared is 58.86 points higher. With a Standard Deviation of 18.37, VBR is slightly more volatile than EMB. The Alpha and Beta of VBR are 5.98 points lower and 0.13 points lower than EMB’s Alpha and Beta.
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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 2012 was the strongest year for EMB, returning 17.64% on an annual basis. The poorest year for EMB in the last ten years was 2013, with a yield of -7.42%. Most years the iShares J.P. Morgan USD Emerging Markets Bond ETF has given investors modest returns, such as in 2014, 2011, and 2016, when gains were 6.69%, 7.2%, and 9.41% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VBR would have resulted in a final balance of $32,611. This is a profit of $22,611 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.28%.
With a $10,000 investment in EMB, the end total would have been $19,295. This equates to a $9,295 profit over 11 years and a compound annual growth rate (CAGR) of 6.43%.
VBR’s CAGR is 5.85 percentage points higher than that of EMB and as a result, would have yielded $13,316 more on a $10,000 investment. Thus, VBR outperformed EMB by 5.85% annually.
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