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VBR vs. VLUE: What’s The Difference?

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

The expense ratio of VBR is 0.08 percentage points lower than VLUE’s (0.07% vs. 0.15%). VBR also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VBR has provided higher returns than VLUE over the past 7 years.

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

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Summary

VBRVLUE
NameVanguard Small-Cap Value Index Fund ETF SharesiShares MSCI USA Value Factor ETF
CategorySmall ValueLarge Value
IssuerVanguardiShares
AUM48.08B15.95B
Avg. Return12.28%8.91%
Div. Yield1.6%1.89%
Expense Ratio0.07%0.15%

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 MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.

VBR’s dividend yield is 0.29% lower than that of VLUE (1.6% vs. 1.89%). Also, VBR yielded on average 3.37% more per year over the past decade (12.28% vs. 8.91%). The expense ratio of VBR is 0.08 percentage points lower than VLUE’s (0.07% vs. 0.15%).

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Fund Composition

Industry Exposure

VBR vs. VLUE - Industry Exposure

VBRVLUE
Technology8.39%26.89%
Industrials18.44%9.14%
Energy5.15%2.42%
Communication Services1.77%10.39%
Utilities3.65%2.68%
Healthcare7.16%14.31%
Consumer Defensive4.36%7.22%
Real Estate10.92%3.19%
Financial Services20.04%10.96%
Consumer Cyclical13.82%10.66%
Basic Materials6.31%2.14%

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 MSCI USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.

VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.

VBR is 9.08% more exposed to the Financial Services sector than VLUE (20.04% vs 10.96%). VBR’s exposure to Industrials and Consumer Cyclical stocks is 9.30% higher and 3.16% higher respectively (18.44% vs. 9.14% and 13.82% vs. 10.66%). In total, Utilities, Consumer Defensive, and Energy also make up 0.84% more of the fund’s holdings compared to VLUE (13.16% vs. 12.32%).

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%.

VLUE - Holdings

VLUE HoldingsWeight
AT&T Inc7.13%
Intel Corp6.14%
General Motors Co3.19%
Micron Technology Inc3.14%
Cisco Systems Inc3.05%
International Business Machines Corp2.76%
Target Corp2.38%
Citigroup Inc2.32%
Ford Motor Co2.23%
Pfizer Inc2.17%

VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.

International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.

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Risk Analysis

VBRVLUE
Mean Return1.080
R-squared82.20
Std. Deviation18.370
Alpha-5.090
Beta1.230
Sharpe Ratio0.670
Treynor Ratio9.150

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 R-squared of 82.2. Its Alpha is -5.09 while VBR’s Sharpe Ratio is 0.67. Furthermore, the fund has a Standard Deviation of 18.37 and a Treynor Ratio of 9.15.

The iShares MSCI USA Value Factor ETF (VLUE) has a Sharpe Ratio of 0 with a Mean Return of 0 and a R-squared of 0. Its Standard Deviation is 0 while VLUE’s Beta is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Alpha of 0.

VBR’s Mean Return is 1.08 points higher than that of VLUE and its R-squared is 82.20 points higher. With a Standard Deviation of 18.37, VBR is slightly more volatile than VLUE. The Alpha and Beta of VBR are 5.09 points lower and 1.23 points higher than VLUE’s Alpha and Beta.

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Performance

Annual Returns

VBR vs. VLUE - Annual Returns

YearVBRVLUE
20205.82%-0.32%
201922.76%27.47%
2018-12.22%-11.18%
201711.79%21.97%
201624.8%15.68%
2015-4.67%-3.54%
201410.55%12.29%
201336.57%0.0%
201218.78%0.0%
2011-4.05%0.0%
201024.97%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 VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

VBR vs. VLUE - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VBR$10,000$16,76512.28%
VLUE$10,000$17,2478.91%

A $10,000 investment in VBR would have resulted in a final balance of $16,765. This is a profit of $6,765 over 7 years and amounts to a compound annual growth rate (CAGR) of 12.28%.

With a $10,000 investment in VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.

VBR’s CAGR is 3.37 percentage points higher than that of VLUE and as a result, would have yielded $482 less on a $10,000 investment. Thus, VBR outperformed VLUE by 3.37% annually.


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