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VCIT vs. IVW: What’s The Difference?

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

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

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

Introduction To Mutual Funds
Introduction To Mutual Funds
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Summary

VCITIVW
NameVanguard Intermediate-Term Corporate Bond Index Fund ETF SharesiShares S&P 500 Growth ETF
CategoryCorporate BondLarge Growth
IssuerVanguardiShares
AUM48.39B35.72B
Avg. Return5.84%16.74%
Div. Yield2.33%0.61%
Expense Ratio0.05%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 Growth ETF (IVW) is a Large Growth fund that is issued by iShares. It currently has 35.72B total assets under management and has yielded an average annual return of 16.74% over the past 10 years. The fund has a dividend yield of 0.61% with an expense ratio of 0.18%.

VCIT’s dividend yield is 1.72% higher than that of IVW (2.33% vs. 0.61%). Also, VCIT yielded on average 10.89% less per year over the past decade (5.84% vs. 16.74%). The expense ratio of VCIT is 0.13 percentage points lower than IVW’s (0.05% vs. 0.18%).

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Fund Composition

Holdings

VCIT - Holdings

VCIT Bond SectorsWeight
BBB55.28%
A37.85%
AA5.22%
AAA1.57%
Below B0.08%
Others0.0%
B0.0%
BB0.0%
US Government0.0%

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.

IVW - Holdings

IVW HoldingsWeight
Apple Inc11.46%
Microsoft Corp10.75%
Amazon.com Inc7.14%
Facebook Inc Class A4.28%
Alphabet Inc Class A4.06%
Alphabet Inc Class C3.86%
Tesla Inc2.65%
NVIDIA Corp2.43%
PayPal Holdings Inc1.62%
Adobe Inc1.49%

IVW’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 11.46%, 10.75%, 7.14%, 4.28%, and 4.06%.

Alphabet Inc Class C (3.86%), Tesla Inc (2.65%), and NVIDIA Corp (2.43%) have a slightly smaller but still significant weight. PayPal Holdings Inc and Adobe Inc are also represented in the IVW’s holdings at 1.62% and 1.49%.

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Risk Analysis

VCITIVW
Mean Return0.441.44
R-squared63.1893.82
Std. Deviation5.0813.77
Alpha0.892.19
Beta1.350.98
Sharpe Ratio0.911.21
Treynor Ratio3.4317.24

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

The iShares S&P 500 Growth ETF (IVW) has a Sharpe Ratio of 1.21 with a Standard Deviation of 13.77 and a Mean Return of 1.44. Its Beta is 0.98 while IVW’s R-squared is 93.82. Furthermore, the fund has a Alpha of 2.19 and a Treynor Ratio of 17.24.

VCIT’s Mean Return is 1.00 points lower than that of IVW and its R-squared is 30.64 points lower. With a Standard Deviation of 5.08, VCIT is slightly less volatile than IVW. The Alpha and Beta of VCIT are 1.30 points lower and 0.37 points higher than IVW’s Alpha and Beta.

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Performance

Annual Returns

VCIT vs. IVW - Annual Returns

YearVCITIVW
20209.55%33.21%
201913.97%30.91%
2018-1.75%-0.17%
20175.5%27.2%
20165.3%6.74%
20150.88%5.33%
20147.47%14.67%
2013-1.8%32.48%
201211.36%14.39%
20117.94%4.49%
201010.65%14.84%

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 2020 was the strongest year for IVW, returning 33.21% on an annual basis. The poorest year for IVW in the last ten years was 2018, with a yield of -0.17%. Most years the iShares S&P 500 Growth ETF has given investors modest returns, such as in 2012, 2014, and 2010, when gains were 14.39%, 14.67%, and 14.84% respectively.

Portfolio Growth

VCIT vs. IVW - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VCIT$10,000$17,4395.84%
IVW$10,000$45,20616.74%

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 IVW, the end total would have been $45,206. This equates to a $35,206 profit over 10 years and a compound annual growth rate (CAGR) of 16.74%.

VCIT’s CAGR is 10.89 percentage points lower than that of IVW and as a result, would have yielded $27,767 less on a $10,000 investment. Thus, VCIT performed worse than IVW by 10.89% annually.


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