VBR vs. SDY: What’s The Difference?

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) and the SPDR S&P Dividend ETF (SDY) are both among the Top 100 ETFs. VBR is a Vanguard Small Value fund and SDY is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between VBR and SDY? And which fund is better?

The expense ratio of VBR is 0.28 percentage points lower than SDY’s (0.07% vs. 0.35%). VBR also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VBR has provided lower returns than SDY over the past 11 years.

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

Summary

VBR SDY
Name Vanguard Small-Cap Value Index Fund ETF Shares SPDR S&P Dividend ETF
Category Small Value Large Value
Issuer Vanguard SPDR State Street Global Advisors
AUM 48.08B 19.67B
Avg. Return 12.28% 12.44%
Div. Yield 1.6% 2.65%
Expense Ratio 0.07% 0.35%

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 SPDR S&P Dividend ETF (SDY) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 19.67B total assets under management and has yielded an average annual return of 12.44% over the past 10 years. The fund has a dividend yield of 2.65% with an expense ratio of 0.35%.

VBR’s dividend yield is 1.05% lower than that of SDY (1.6% vs. 2.65%). Also, VBR yielded on average 0.16% less per year over the past decade (12.28% vs. 12.44%). The expense ratio of VBR is 0.28 percentage points lower than SDY’s (0.07% vs. 0.35%).

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Fund Composition

Industry Exposure

VBR vs. SDY - Industry Exposure

VBR SDY
Technology 8.39% 2.0%
Industrials 18.44% 15.89%
Energy 5.15% 5.95%
Communication Services 1.77% 4.64%
Utilities 3.65% 12.14%
Healthcare 7.16% 7.35%
Consumer Defensive 4.36% 14.01%
Real Estate 10.92% 6.57%
Financial Services 20.04% 16.32%
Consumer Cyclical 13.82% 8.68%
Basic Materials 6.31% 6.45%

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 SPDR S&P Dividend ETF (SDY) has the most exposure to the Financial Services sector at 16.32%. This is followed by Industrials and Consumer Defensive at 15.89% and 14.01% respectively. Communication Services (4.64%), Energy (5.95%), and Basic Materials (6.45%) only make up 17.04% of the fund’s total assets.

SDY’s mid-section with moderate exposure is comprised of Real Estate, Healthcare, Consumer Cyclical, Utilities, and Consumer Defensive stocks at 6.57%, 7.35%, 8.68%, 12.14%, and 14.01%.

VBR is 3.72% more exposed to the Financial Services sector than SDY (20.04% vs 16.32%). VBR’s exposure to Industrials and Consumer Cyclical stocks is 2.55% higher and 5.14% higher respectively (18.44% vs. 15.89% and 13.82% vs. 8.68%). In total, Utilities, Consumer Defensive, and Energy also make up 18.94% less of the fund’s holdings compared to SDY (13.16% vs. 32.10%).

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%.

SDY - Holdings

SDY Holdings Weight
Exxon Mobil Corp 2.81%
AT&T Inc 2.5%
South Jersey Industries Inc 2.22%
Chevron Corp 2.02%
International Business Machines Corp 2.0%
AbbVie Inc 1.93%
National Retail Properties Inc 1.86%
Federal Realty Investment Trust 1.77%
Realty Income Corp 1.7%
Old Republic International Corp 1.65%

SDY’s Top Holdings are Exxon Mobil Corp, AT&T Inc, South Jersey Industries Inc, Chevron Corp, and International Business Machines Corp at 2.81%, 2.5%, 2.22%, 2.02%, and 2.0%.

AbbVie Inc (1.93%), National Retail Properties Inc (1.86%), and Federal Realty Investment Trust (1.77%) have a slightly smaller but still significant weight. Realty Income Corp and Old Republic International Corp are also represented in the SDY’s holdings at 1.7% and 1.65%.

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Risk Analysis

VBR SDY
Mean Return 1.08 1.07
R-squared 82.2 83.62
Std. Deviation 18.37 12.9
Alpha -5.09 -0.1
Beta 1.23 0.87
Sharpe Ratio 0.67 0.95
Treynor Ratio 9.15 13.94

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 R-squared of 82.2. Its Treynor Ratio is 9.15 while VBR’s Beta is 1.23. Furthermore, the fund has a Mean Return of 1.08 and a Sharpe Ratio of 0.67.

The SPDR S&P Dividend ETF (SDY) has a Standard Deviation of 12.9 with a R-squared of 83.62 and a Treynor Ratio of 13.94. Its Sharpe Ratio is 0.95 while SDY’s Mean Return is 1.07. Furthermore, the fund has a Alpha of -0.1 and a Beta of 0.87.

VBR’s Mean Return is 0.01 points higher than that of SDY and its R-squared is 1.42 points lower. With a Standard Deviation of 18.37, VBR is slightly more volatile than SDY. The Alpha and Beta of VBR are 4.99 points lower and 0.36 points higher than SDY’s Alpha and Beta.

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Performance

Annual Returns

VBR vs. SDY - Annual Returns

Year VBR SDY
2020 5.82% 1.78%
2019 22.76% 23.37%
2018 -12.22% -2.73%
2017 11.79% 15.84%
2016 24.8% 20.17%
2015 -4.67% -0.7%
2014 10.55% 13.8%
2013 36.57% 30.09%
2012 18.78% 11.51%
2011 -4.05% 7.28%
2010 24.97% 16.41%

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 2013 was the strongest year for SDY, returning 30.09% on an annual basis. The poorest year for SDY in the last ten years was 2018, with a yield of -2.73%. Most years the SPDR S&P Dividend ETF has given investors modest returns, such as in 2012, 2014, and 2017, when gains were 11.51%, 13.8%, and 15.84% respectively.

Portfolio Growth

VBR vs. SDY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VBR $10,000 $32,611 12.28%
SDY $10,000 $34,806 12.44%

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 SDY, the end total would have been $34,806. This equates to a $24,806 profit over 11 years and a compound annual growth rate (CAGR) of 12.44%.

VBR’s CAGR is 0.16 percentage points lower than that of SDY and as a result, would have yielded $2,195 less on a $10,000 investment. Thus, VBR performed worse than SDY by 0.16% annually.


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