VCIT vs. DIA: What’s The Difference?

The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) and the SPDR Dow Jones Industrial Average ETF Trust (DIA) are both among the Top 100 ETFs. VCIT is a Vanguard Corporate Bond fund and DIA is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between VCIT and DIA? And which fund is better?

The expense ratio of VCIT is 0.11 percentage points lower than DIA’s (0.05% vs. 0.16%). VCIT is mostly comprised of BBB bonds while DIA has a high exposure to the financial services sector. Overall, VCIT has provided lower returns than DIA over the past ten years.

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

Summary

VCIT DIA
Name Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares SPDR Dow Jones Industrial Average ETF Trust
Category Corporate Bond Large Value
Issuer Vanguard SPDR State Street Global Advisors
AUM 48.39B 30.46B
Avg. Return 5.84% 13.35%
Div. Yield 2.33% 1.61%
Expense Ratio 0.05% 0.16%

The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) is a Corporate Bond fund that is issued by Vanguard. It currently has 48.39B total assets under management and has yielded an average annual return of 5.84% over the past 10 years. The fund has a dividend yield of 2.33% with an expense ratio of 0.05%.

The SPDR Dow Jones Industrial Average ETF Trust (DIA) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 30.46B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.61% with an expense ratio of 0.16%.

VCIT’s dividend yield is 0.72% higher than that of DIA (2.33% vs. 1.61%). Also, VCIT yielded on average 7.51% less per year over the past decade (5.84% vs. 13.35%). The expense ratio of VCIT is 0.11 percentage points lower than DIA’s (0.05% vs. 0.16%).

Fund Composition

Holdings

VCIT - Holdings

VCIT Bond Sectors Weight
BBB 55.28%
A 37.85%
AA 5.22%
AAA 1.57%
Below B 0.08%
Others 0.0%
B 0.0%
BB 0.0%
US Government 0.0%

VCIT’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and Below B at 55.28%, 37.85%, 5.22%, 1.57%, and 0.08%. The fund is less weighted towards Others (0.0%), B (0.0%), and BB (0.0%) rated bonds.

DIA - Holdings

DIA Holdings Weight
UnitedHealth Group Inc 7.63%
Goldman Sachs Group Inc 7.23%
The Home Depot Inc 6.07%
Microsoft Corp 5.16%
Salesforce.com Inc 4.65%
Amgen Inc 4.64%
Boeing Co 4.56%
Visa Inc Class A 4.45%
McDonald’s Corp 4.4%
Honeywell International Inc 4.18%

DIA’s Top Holdings are UnitedHealth Group Inc, Goldman Sachs Group Inc, The Home Depot Inc, Microsoft Corp, and Salesforce.com Inc at 7.63%, 7.23%, 6.07%, 5.16%, and 4.65%.

Amgen Inc (4.64%), Boeing Co (4.56%), and Visa Inc Class A (4.45%) have a slightly smaller but still significant weight. McDonald’s Corp and Honeywell International Inc are also represented in the DIA’s holdings at 4.4% and 4.18%.

Risk Analysis

VCIT DIA
Mean Return 0.44 1.13
R-squared 63.18 93.31
Std. Deviation 5.08 13.68
Alpha 0.89 -0.94
Beta 1.35 0.97
Sharpe Ratio 0.91 0.94
Treynor Ratio 3.43 13.07

The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a Mean Return of 0.44 with a Beta of 1.35 and a Treynor Ratio of 3.43. Its Standard Deviation is 5.08 while VCIT’s Sharpe Ratio is 0.91. Furthermore, the fund has a R-squared of 63.18 and a Alpha of 0.89.

The SPDR Dow Jones Industrial Average ETF Trust (DIA) has a R-squared of 93.31 with a Alpha of -0.94 and a Sharpe Ratio of 0.94. Its Treynor Ratio is 13.07 while DIA’s Beta is 0.97. Furthermore, the fund has a Mean Return of 1.13 and a Standard Deviation of 13.68.

VCIT’s Mean Return is 0.69 points lower than that of DIA and its R-squared is 30.13 points lower. With a Standard Deviation of 5.08, VCIT is slightly less volatile than DIA. The Alpha and Beta of VCIT are 1.83 points higher and 0.38 points higher than DIA’s Alpha and Beta.

Performance

Annual Returns

VCIT vs. DIA - Annual Returns

Year VCIT DIA
2020 9.55% 9.63%
2019 13.97% 25.09%
2018 -1.75% -3.6%
2017 5.5% 27.97%
2016 5.3% 16.28%
2015 0.88% 0.1%
2014 7.47% 9.88%
2013 -1.8% 29.41%
2012 11.36% 10.04%
2011 7.94% 8.21%
2010 10.65% 13.87%

VCIT had its best year in 2019 with an annual return of 13.97%. VCIT’s worst year over the past decade yielded -1.8% and occurred in 2013. In most years the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares provided moderate returns such as in 2017, 2014, and 2011 where annual returns amounted to 5.5%, 7.47%, and 7.94% respectively.

The year 2013 was the strongest year for DIA, returning 29.41% on an annual basis. The poorest year for DIA in the last ten years was 2018, with a yield of -3.6%. Most years the SPDR Dow Jones Industrial Average ETF Trust has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 9.88%, 10.04%, and 13.87% respectively.

Portfolio Growth

VCIT vs. DIA - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCIT $10,000 $17,439 5.84%
DIA $10,000 $33,341 13.35%

A $10,000 investment in VCIT would have resulted in a final balance of $17,439. This is a profit of $7,439 over 10 years and amounts to a compound annual growth rate (CAGR) of 5.84%.

With a $10,000 investment in DIA, the end total would have been $33,341. This equates to a $23,341 profit over 10 years and a compound annual growth rate (CAGR) of 13.35%.

VCIT’s CAGR is 7.51 percentage points lower than that of DIA and as a result, would have yielded $15,902 less on a $10,000 investment. Thus, VCIT performed worse than DIA by 7.51% annually.


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