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VBR vs. VBK: What’s The Difference?

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. VBR is a Vanguard Small Value fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between VBR and VBK? And which fund is better?

VBR and VBK have the same expense ratio: 0.07%. VBR also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VBR has provided lower returns than VBK over the past 11 years.

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

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Summary

VBRVBK
NameVanguard Small-Cap Value Index Fund ETF SharesVanguard Small-Cap Growth Index Fund ETF Shares
CategorySmall ValueSmall Growth
IssuerVanguardVanguard
AUM48.08B37.89B
Avg. Return12.28%16.53%
Div. Yield1.6%0.45%
Expense Ratio0.07%0.07%

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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.

VBR’s dividend yield is 1.15% higher than that of VBK (1.6% vs. 0.45%). Also, VBR yielded on average 4.25% less per year over the past decade (12.28% vs. 16.53%). VBR and VBK have the same expense ratio: 0.07%.

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Fund Composition

Industry Exposure

VBR vs. VBK - Industry Exposure

VBRVBK
Technology8.39%27.87%
Industrials18.44%13.19%
Energy5.15%1.77%
Communication Services1.77%3.24%
Utilities3.65%0.32%
Healthcare7.16%23.24%
Consumer Defensive4.36%3.83%
Real Estate10.92%7.87%
Financial Services20.04%4.05%
Consumer Cyclical13.82%12.13%
Basic Materials6.31%2.49%

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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.

VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.

VBR is 15.99% more exposed to the Financial Services sector than VBK (20.04% vs 4.05%). VBR’s exposure to Industrials and Consumer Cyclical stocks is 5.25% higher and 1.69% higher respectively (18.44% vs. 13.19% and 13.82% vs. 12.13%). In total, Utilities, Consumer Defensive, and Energy also make up 7.24% more of the fund’s holdings compared to VBK (13.16% vs. 5.92%).

Holdings

VBR - Holdings

VBR HoldingsWeight
Diamondback Energy Inc0.55%
VICI Properties Inc Ordinary Shares0.54%
IDEX Corp0.54%
Nuance Communications Inc0.5%
Molina Healthcare Inc0.48%
Signature Bank0.46%
Novavax Inc0.44%
Howmet Aerospace Inc0.44%
Apollo Global Management Inc Class A0.42%
Brown & Brown Inc0.41%

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%.

VBK - Holdings

VBK HoldingsWeight
Charles River Laboratories International Inc0.78%
Pool Corp0.73%
Bio-Techne Corp0.73%
Avantor Inc0.73%
PerkinElmer Inc0.72%
Entegris Inc0.7%
PTC Inc0.62%
Fair Isaac Corp0.57%
Bill.com Holdings Inc Ordinary Shares0.56%
Avalara Inc0.55%

VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.

Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.

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Risk Analysis

VBRVBK
Mean Return1.081.22
R-squared82.280.56
Std. Deviation18.3717.95
Alpha-5.09-2.81
Beta1.231.18
Sharpe Ratio0.670.78
Treynor Ratio9.1511.18

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Beta of 1.23 with a Treynor Ratio of 9.15 and a Sharpe Ratio of 0.67. Its Standard Deviation is 18.37 while VBR’s R-squared is 82.2. Furthermore, the fund has a Mean Return of 1.08 and a Alpha of -5.09.

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Mean Return of 1.22 with a Treynor Ratio of 11.18 and a Standard Deviation of 17.95. Its R-squared is 80.56 while VBK’s Beta is 1.18. Furthermore, the fund has a Sharpe Ratio of 0.78 and a Alpha of -2.81.

VBR’s Mean Return is 0.14 points lower than that of VBK and its R-squared is 1.64 points higher. With a Standard Deviation of 18.37, VBR is slightly more volatile than VBK. The Alpha and Beta of VBR are 2.28 points lower and 0.05 points higher than VBK’s Alpha and Beta.

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Performance

Annual Returns

VBR vs. VBK - Annual Returns

YearVBRVBK
20205.82%35.29%
201922.76%32.75%
2018-12.22%-5.68%
201711.79%21.9%
201624.8%10.74%
2015-4.67%-2.51%
201410.55%4.02%
201336.57%38.18%
201218.78%17.67%
2011-4.05%-1.43%
201024.97%30.87%

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 VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.

Portfolio Growth

VBR vs. VBK - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VBR$10,000$32,61112.28%
VBK$10,000$48,63916.53%

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 VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.

VBR’s CAGR is 4.25 percentage points lower than that of VBK and as a result, would have yielded $16,028 less on a $10,000 investment. Thus, VBR performed worse than VBK by 4.25% annually.


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