VCIT vs. IVE: What’s The Difference?

The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) and the iShares S&P 500 Value ETF (IVE) are both among the Top 100 ETFs. VCIT is a Vanguard Corporate Bond fund and IVE is a iShares Large Value fund. So, what’s the difference between VCIT and IVE? And which fund is better?

The expense ratio of VCIT is 0.13 percentage points lower than IVE’s (0.05% vs. 0.18%). VCIT is mostly comprised of BBB bonds while IVE has a high exposure to the financial services sector. Overall, VCIT has provided lower returns than IVE over the past ten years.

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

Summary

VCIT IVE
Name Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares iShares S&P 500 Value ETF
Category Corporate Bond Large Value
Issuer Vanguard iShares
AUM 48.39B 22.4B
Avg. Return 5.84% 11.68%
Div. Yield 2.33% 1.88%
Expense Ratio 0.05% 0.18%

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 iShares S&P 500 Value ETF (IVE) is a Large Value fund that is issued by iShares. It currently has 22.4B total assets under management and has yielded an average annual return of 11.68% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.18%.

VCIT’s dividend yield is 0.45% higher than that of IVE (2.33% vs. 1.88%). Also, VCIT yielded on average 5.84% less per year over the past decade (5.84% vs. 11.68%). The expense ratio of VCIT is 0.13 percentage points lower than IVE’s (0.05% vs. 0.18%).

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.

IVE - Holdings

IVE Holdings Weight
Berkshire Hathaway Inc Class B 3.05%
JPMorgan Chase & Co 2.65%
The Walt Disney Co 1.85%
Bank of America Corp 1.67%
Johnson & Johnson 1.57%
Exxon Mobil Corp 1.41%
Pfizer Inc 1.38%
Cisco Systems Inc 1.35%
Verizon Communications Inc 1.33%
Intel Corp 1.25%

IVE’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, The Walt Disney Co, Bank of America Corp, and Johnson & Johnson at 3.05%, 2.65%, 1.85%, 1.67%, and 1.57%.

Exxon Mobil Corp (1.41%), Pfizer Inc (1.38%), and Cisco Systems Inc (1.35%) have a slightly smaller but still significant weight. Verizon Communications Inc and Intel Corp are also represented in the IVE’s holdings at 1.33% and 1.25%.

Risk Analysis

VCIT IVE
Mean Return 0.44 1.05
R-squared 63.18 92.08
Std. Deviation 5.08 14.3
Alpha 0.89 -2.9
Beta 1.35 1.01
Sharpe Ratio 0.91 0.83
Treynor Ratio 3.43 11.41

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

The iShares S&P 500 Value ETF (IVE) has a R-squared of 92.08 with a Sharpe Ratio of 0.83 and a Mean Return of 1.05. Its Alpha is -2.9 while IVE’s Beta is 1.01. Furthermore, the fund has a Standard Deviation of 14.3 and a Treynor Ratio of 11.41.

VCIT’s Mean Return is 0.61 points lower than that of IVE and its R-squared is 28.90 points lower. With a Standard Deviation of 5.08, VCIT is slightly less volatile than IVE. The Alpha and Beta of VCIT are 3.79 points higher and 0.34 points higher than IVE’s Alpha and Beta.

Performance

Annual Returns

VCIT vs. IVE - Annual Returns

Year VCIT IVE
2020 9.55% 1.24%
2019 13.97% 31.71%
2018 -1.75% -9.09%
2017 5.5% 15.19%
2016 5.3% 17.17%
2015 0.88% -3.24%
2014 7.47% 12.14%
2013 -1.8% 31.69%
2012 11.36% 17.45%
2011 7.94% -0.63%
2010 10.65% 14.9%

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 2019 was the strongest year for IVE, returning 31.71% on an annual basis. The poorest year for IVE in the last ten years was 2018, with a yield of -9.09%. Most years the iShares S&P 500 Value ETF has given investors modest returns, such as in 2014, 2010, and 2017, when gains were 12.14%, 14.9%, and 15.19% respectively.

Portfolio Growth

VCIT vs. IVE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCIT $10,000 $17,439 5.84%
IVE $10,000 $27,285 11.68%

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 IVE, the end total would have been $27,285. This equates to a $17,285 profit over 10 years and a compound annual growth rate (CAGR) of 11.68%.

VCIT’s CAGR is 5.84 percentage points lower than that of IVE and as a result, would have yielded $9,846 less on a $10,000 investment. Thus, VCIT performed worse than IVE by 5.84% annually.


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