The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. VBR is a Vanguard Small Value fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between VBR and GOVT? And which fund is better?
The expense ratio of VBR is 0.02 percentage points higher than GOVT’s (0.07% vs. 0.05%). VBR also has a high exposure to the financial services sector while GOVT is mostly comprised of AAA bonds. Overall, VBR has provided higher returns than GOVT over the past 8 years.
In this article, we’ll compare VBR vs. GOVT. We’ll look at portfolio growth and fund composition, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss VBR’s and GOVT’s holdings, annual returns, and performance and examine how these affect their overall returns.
Summary
| VBR | GOVT | |
| Name | Vanguard Small-Cap Value Index Fund ETF Shares | iShares U.S. Treasury Bond ETF |
| Category | Small Value | Intermediate Government |
| Issuer | Vanguard | iShares |
| AUM | 48.08B | 17.07B |
| Avg. Return | 12.28% | 2.67% |
| Div. Yield | 1.6% | 1.0% |
| Expense Ratio | 0.07% | 0.05% |
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 U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.
VBR’s dividend yield is 0.60% higher than that of GOVT (1.6% vs. 1.0%). Also, VBR yielded on average 9.61% more per year over the past decade (12.28% vs. 2.67%). The expense ratio of VBR is 0.02 percentage points higher than GOVT’s (0.07% vs. 0.05%).
Fund Composition
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%.
| GOVT Bond Sectors | Weight |
| AAA | 100.0% |
| Others | 0.0% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
GOVT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
Risk Analysis
| VBR | GOVT | |
| 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 Mean Return of 1.08 with a Beta of 1.23 and a Alpha of -5.09. Its Treynor Ratio is 9.15 while VBR’s Standard Deviation is 18.37. Furthermore, the fund has a Sharpe Ratio of 0.67 and a R-squared of 82.2.
The iShares U.S. Treasury Bond ETF (GOVT) has a Treynor Ratio of 0 with a Standard Deviation of 0 and a R-squared of 0. Its Mean Return is 0 while GOVT’s Alpha is 0. Furthermore, the fund has a Beta of 0 and a Sharpe Ratio of 0.
VBR’s Mean Return is 1.08 points higher than that of GOVT and its R-squared is 82.20 points higher. With a Standard Deviation of 18.37, VBR is slightly more volatile than GOVT. The Alpha and Beta of VBR are 5.09 points lower and 1.23 points higher than GOVT’s Alpha and Beta.
Performance
Annual Returns
| Year | VBR | GOVT |
| 2020 | 5.82% | 7.92% |
| 2019 | 22.76% | 6.71% |
| 2018 | -12.22% | 0.74% |
| 2017 | 11.79% | 2.19% |
| 2016 | 24.8% | 0.92% |
| 2015 | -4.67% | 0.76% |
| 2014 | 10.55% | 4.99% |
| 2013 | 36.57% | -2.84% |
| 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 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VBR | $10,000 | $22,897 | 12.28% |
| GOVT | $10,000 | $12,297 | 2.67% |
A $10,000 investment in VBR would have resulted in a final balance of $22,897. This is a profit of $12,897 over 8 years and amounts to a compound annual growth rate (CAGR) of 12.28%.
With a $10,000 investment in GOVT, the end total would have been $12,297. This equates to a $2,297 profit over 8 years and a compound annual growth rate (CAGR) of 2.67%.
VBR’s CAGR is 9.61 percentage points higher than that of GOVT and as a result, would have yielded $10,600 more on a $10,000 investment. Thus, VBR outperformed GOVT by 9.61% annually.
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