VBR vs. VOE: What’s The Difference?

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

VBR and VOE 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 VOE over the past 11 years.

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

Summary

VBR VOE
Name Vanguard Small-Cap Value Index Fund ETF Shares Vanguard Mid-Cap Value Index Fund ETF Shares
Category Small Value Mid-Cap Value
Issuer Vanguard Vanguard
AUM 48.08B 26.78B
Avg. Return 12.28% 12.52%
Div. Yield 1.6% 1.87%
Expense Ratio 0.07% 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 Mid-Cap Value Index Fund ETF Shares (VOE) is a Mid-Cap Value fund that is issued by Vanguard. It currently has 26.78B total assets under management and has yielded an average annual return of 12.52% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.07%.

VBR’s dividend yield is 0.27% lower than that of VOE (1.6% vs. 1.87%). Also, VBR yielded on average 0.24% less per year over the past decade (12.28% vs. 12.52%). VBR and VOE have the same expense ratio: 0.07%.

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Fund Composition

Industry Exposure

VBR vs. VOE - Industry Exposure

VBR VOE
Technology 8.39% 9.85%
Industrials 18.44% 9.4%
Energy 5.15% 5.69%
Communication Services 1.77% 5.27%
Utilities 3.65% 10.93%
Healthcare 7.16% 7.04%
Consumer Defensive 4.36% 4.85%
Real Estate 10.92% 11.48%
Financial Services 20.04% 18.26%
Consumer Cyclical 13.82% 11.8%
Basic Materials 6.31% 5.44%

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 Mid-Cap Value Index Fund ETF Shares (VOE) has the most exposure to the Financial Services sector at 18.26%. This is followed by Consumer Cyclical and Real Estate at 11.8% and 11.48% respectively. Communication Services (5.27%), Basic Materials (5.44%), and Energy (5.69%) only make up 16.40% of the fund’s total assets.

VOE’s mid-section with moderate exposure is comprised of Healthcare, Industrials, Technology, Utilities, and Real Estate stocks at 7.04%, 9.4%, 9.85%, 10.93%, and 11.48%.

VBR is 1.78% more exposed to the Financial Services sector than VOE (20.04% vs 18.26%). VBR’s exposure to Industrials and Consumer Cyclical stocks is 9.04% higher and 2.02% higher respectively (18.44% vs. 9.4% and 13.82% vs. 11.8%). In total, Utilities, Consumer Defensive, and Energy also make up 8.31% less of the fund’s holdings compared to VOE (13.16% vs. 21.47%).

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%.

VOE - Holdings

VOE Holdings Weight
Carrier Global Corp Ordinary Shares 1.28%
International Flavors & Fragrances Inc 1.13%
Motorola Solutions Inc 1.12%
Discover Financial Services 1.09%
Welltower Inc 1.05%
Corteva Inc 0.99%
Valero Energy Corp 0.97%
Corning Inc 0.95%
Willis Towers Watson PLC 0.9%
D.R. Horton Inc 0.89%

VOE’s Top Holdings are Carrier Global Corp Ordinary Shares, International Flavors & Fragrances Inc, Motorola Solutions Inc, Discover Financial Services, and Welltower Inc at 1.28%, 1.13%, 1.12%, 1.09%, and 1.05%.

Corteva Inc (0.99%), Valero Energy Corp (0.97%), and Corning Inc (0.95%) have a slightly smaller but still significant weight. Willis Towers Watson PLC and D.R. Horton Inc are also represented in the VOE’s holdings at 0.9% and 0.89%.

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Risk Analysis

VBR VOE
Mean Return 1.08 1.05
R-squared 82.2 88.76
Std. Deviation 18.37 15.98
Alpha -5.09 -3.77
Beta 1.23 1.11
Sharpe Ratio 0.67 0.75
Treynor Ratio 9.15 10.19

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

The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a R-squared of 88.76 with a Sharpe Ratio of 0.75 and a Mean Return of 1.05. Its Standard Deviation is 15.98 while VOE’s Alpha is -3.77. Furthermore, the fund has a Treynor Ratio of 10.19 and a Beta of 1.11.

VBR’s Mean Return is 0.03 points higher than that of VOE and its R-squared is 6.56 points lower. With a Standard Deviation of 18.37, VBR is slightly more volatile than VOE. The Alpha and Beta of VBR are 1.32 points lower and 0.12 points higher than VOE’s Alpha and Beta.

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Performance

Annual Returns

VBR vs. VOE - Annual Returns

Year VBR VOE
2020 5.82% 2.5%
2019 22.76% 27.98%
2018 -12.22% -12.41%
2017 11.79% 17.05%
2016 24.8% 15.26%
2015 -4.67% -1.8%
2014 10.55% 13.98%
2013 36.57% 37.65%
2012 18.78% 16.04%
2011 -4.05% -0.32%
2010 24.97% 21.83%

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 VOE, returning 37.65% on an annual basis. The poorest year for VOE in the last ten years was 2018, with a yield of -12.41%. Most years the Vanguard Mid-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 13.98%, 15.26%, and 16.04% respectively.

Portfolio Growth

VBR vs. VOE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VBR $10,000 $32,611 12.28%
VOE $10,000 $33,655 12.52%

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 VOE, the end total would have been $33,655. This equates to a $23,655 profit over 11 years and a compound annual growth rate (CAGR) of 12.52%.

VBR’s CAGR is 0.24 percentage points lower than that of VOE and as a result, would have yielded $1,044 less on a $10,000 investment. Thus, VBR performed worse than VOE by 0.24% annually.


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