The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. VBR is a Vanguard Small Value fund and IUSB is a iShares N/A fund. So, what’s the difference between VBR and IUSB? And which fund is better?
The expense ratio of VBR is 0.01 percentage points higher than IUSB’s (0.07% vs. 0.06%). VBR also has a high exposure to the financial services sector while IUSB is mostly comprised of AAA bonds. Overall, VBR has provided higher returns than IUSB over the past 6 years.
In this article, we’ll compare VBR vs. IUSB. We’ll look at industry exposure and risk metrics, as well as at their annual returns and fund composition. Moreover, I’ll also discuss VBR’s and IUSB’s performance, holdings, and portfolio growth and examine how these affect their overall returns.
Summary
| VBR | IUSB | |
| Name | Vanguard Small-Cap Value Index Fund ETF Shares | iShares Core Total USD Bond Market ETF |
| Category | Small Value | N/A |
| Issuer | Vanguard | iShares |
| AUM | 48.08B | 14.49B |
| Avg. Return | 12.28% | 4.13% |
| Div. Yield | 1.6% | 2.1% |
| Expense Ratio | 0.07% | 0.06% |
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 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%.
VBR’s dividend yield is 0.50% lower than that of IUSB (1.6% vs. 2.1%). Also, VBR yielded on average 8.15% more per year over the past decade (12.28% vs. 4.13%). The expense ratio of VBR is 0.01 percentage points higher than IUSB’s (0.07% vs. 0.06%).
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%.
| IUSB Bond Sectors | Weight |
| AAA | 58.32% |
| BBB | 16.98% |
| A | 12.27% |
| BB | 4.33% |
| AA | 3.36% |
| B | 2.8% |
| Others | 1.01% |
| Below B | 0.92% |
| US Government | 0.0% |
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.
Risk Analysis
| VBR | IUSB | |
| 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 Alpha of -5.09 and a Mean Return of 1.08. Its Treynor Ratio is 9.15 while VBR’s Beta is 1.23. Furthermore, the fund has a R-squared of 82.2 and a Sharpe Ratio of 0.67.
The iShares Core Total USD Bond Market ETF (IUSB) has a Standard Deviation of 0 with a Mean Return of 0 and a Alpha of 0. Its R-squared is 0 while IUSB’s Sharpe Ratio is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Beta of 0.
VBR’s Mean Return is 1.08 points higher than that of IUSB and its R-squared is 82.20 points higher. With a Standard Deviation of 18.37, VBR is slightly more volatile than IUSB. The Alpha and Beta of VBR are 5.09 points lower and 1.23 points higher than IUSB’s Alpha and Beta.
Performance
Annual Returns
| Year | VBR | IUSB |
| 2020 | 5.82% | 7.59% |
| 2019 | 22.76% | 9.26% |
| 2018 | -12.22% | -0.38% |
| 2017 | 11.79% | 4.06% |
| 2016 | 24.8% | 3.78% |
| 2015 | -4.67% | 0.46% |
| 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 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
| Fund | Initial Balance | Final Balance | CAGR |
| VBR | $10,000 | $15,165 | 12.28% |
| IUSB | $10,000 | $12,704 | 4.13% |
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 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%.
VBR’s CAGR is 8.15 percentage points higher than that of IUSB and as a result, would have yielded $2,461 more on a $10,000 investment. Thus, VBR outperformed IUSB by 8.15% annually.
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