The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) and the iShares S&P 500 Value ETF (IVE) are both among the Top 100 ETFs. VBR is a Vanguard Small Value fund and IVE is a iShares Large Value fund. So, what’s the difference between VBR and IVE? And which fund is better?
The expense ratio of VBR is 0.11 percentage points lower than IVE’s (0.07% vs. 0.18%). VBR also has a lower exposure to the financial services sector and a higher standard deviation. Overall, VBR has provided higher returns than IVE over the past 11 years.
In this article, we’ll compare VBR vs. IVE. We’ll look at portfolio growth and performance, as well as at their risk metrics and industry exposure. Moreover, I’ll also discuss VBR’s and IVE’s annual returns, holdings, and fund composition and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Value Index Fund ETF Shares||iShares S&P 500 Value ETF|
|Category||Small Value||Large Value|
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 S&P 500 Value ETF (IVE) is a Large Value fund that is issued by iShares. It currently has 22.4B total assets under management and has yielded an average annual return of 11.68% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.18%.
VBR’s dividend yield is 0.28% lower than that of IVE (1.6% vs. 1.88%). Also, VBR yielded on average 0.60% more per year over the past decade (12.28% vs. 11.68%). The expense ratio of VBR is 0.11 percentage points lower than IVE’s (0.07% vs. 0.18%).
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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 S&P 500 Value ETF (IVE) has the most exposure to the Financial Services sector at 22.06%. This is followed by Healthcare and Industrials at 15.4% and 12.19% respectively. Real Estate (4.38%), Utilities (4.82%), and Energy (5.43%) only make up 14.63% of the fund’s total assets.
IVE’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Consumer Defensive, Technology, and Industrials stocks at 6.4%, 7.68%, 9.23%, 9.41%, and 12.19%.
VBR is 2.02% less exposed to the Financial Services sector than IVE (20.04% vs 22.06%). VBR’s exposure to Industrials and Consumer Cyclical stocks is 6.25% higher and 6.14% higher respectively (18.44% vs. 12.19% and 13.82% vs. 7.68%). In total, Utilities, Consumer Defensive, and Energy also make up 6.32% less of the fund’s holdings compared to IVE (13.16% vs. 19.48%).
|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%.
|Berkshire Hathaway Inc Class B||3.05%|
|JPMorgan Chase & Co||2.65%|
|The Walt Disney Co||1.85%|
|Bank of America Corp||1.67%|
|Johnson & Johnson||1.57%|
|Exxon Mobil Corp||1.41%|
|Cisco Systems Inc||1.35%|
|Verizon Communications Inc||1.33%|
IVE’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, The Walt Disney Co, Bank of America Corp, and Johnson & Johnson at 3.05%, 2.65%, 1.85%, 1.67%, and 1.57%.
Exxon Mobil Corp (1.41%), Pfizer Inc (1.38%), and Cisco Systems Inc (1.35%) have a slightly smaller but still significant weight. Verizon Communications Inc and Intel Corp are also represented in the IVE’s holdings at 1.33% and 1.25%.
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The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Beta of 1.23 with a R-squared of 82.2 and a Alpha of -5.09. Its Sharpe Ratio is 0.67 while VBR’s Treynor Ratio is 9.15. Furthermore, the fund has a Standard Deviation of 18.37 and a Mean Return of 1.08.
The iShares S&P 500 Value ETF (IVE) has a Treynor Ratio of 11.41 with a Standard Deviation of 14.3 and a Sharpe Ratio of 0.83. Its R-squared is 92.08 while IVE’s Beta is 1.01. Furthermore, the fund has a Alpha of -2.9 and a Mean Return of 1.05.
VBR’s Mean Return is 0.03 points higher than that of IVE and its R-squared is 9.88 points lower. With a Standard Deviation of 18.37, VBR is slightly more volatile than IVE. The Alpha and Beta of VBR are 2.19 points lower and 0.22 points higher than IVE’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 2019 was the strongest year for IVE, returning 31.71% on an annual basis. The poorest year for IVE in the last ten years was 2018, with a yield of -9.09%. Most years the iShares S&P 500 Value ETF has given investors modest returns, such as in 2014, 2010, and 2017, when gains were 12.14%, 14.9%, and 15.19% 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 IVE, the end total would have been $31,350. This equates to a $21,350 profit over 11 years and a compound annual growth rate (CAGR) of 11.68%.
VBR’s CAGR is 0.60 percentage points higher than that of IVE and as a result, would have yielded $1,261 more on a $10,000 investment. Thus, VBR outperformed IVE by 0.60% annually.
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