VCIT vs. VLUE: What’s The Difference?

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

The expense ratio of VCIT is 0.10 percentage points lower than VLUE’s (0.05% vs. 0.15%). VCIT is mostly comprised of BBB bonds while VLUE has a high exposure to the technology sector. Overall, VCIT has provided lower returns than VLUE over the past ten years.

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

Summary

VCIT VLUE
Name Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares iShares MSCI USA Value Factor ETF
Category Corporate Bond Large Value
Issuer Vanguard iShares
AUM 48.39B 15.95B
Avg. Return 5.84% 8.91%
Div. Yield 2.33% 1.89%
Expense Ratio 0.05% 0.15%

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 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%.

VCIT’s dividend yield is 0.44% higher than that of VLUE (2.33% vs. 1.89%). Also, VCIT yielded on average 3.07% less per year over the past decade (5.84% vs. 8.91%). The expense ratio of VCIT is 0.10 percentage points lower than VLUE’s (0.05% vs. 0.15%).

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.

VLUE - Holdings

VLUE Holdings Weight
AT&T Inc 7.13%
Intel Corp 6.14%
General Motors Co 3.19%
Micron Technology Inc 3.14%
Cisco Systems Inc 3.05%
International Business Machines Corp 2.76%
Target Corp 2.38%
Citigroup Inc 2.32%
Ford Motor Co 2.23%
Pfizer Inc 2.17%

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%.

Risk Analysis

VCIT VLUE
Mean Return 0.44 0
R-squared 63.18 0
Std. Deviation 5.08 0
Alpha 0.89 0
Beta 1.35 0
Sharpe Ratio 0.91 0
Treynor Ratio 3.43 0

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

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

VCIT’s Mean Return is 0.44 points higher than that of VLUE and its R-squared is 63.18 points higher. With a Standard Deviation of 5.08, VCIT is slightly more volatile than VLUE. The Alpha and Beta of VCIT are 0.89 points higher and 1.35 points higher than VLUE’s Alpha and Beta.

Performance

Annual Returns

VCIT vs. VLUE - Annual Returns

Year VCIT VLUE
2020 9.55% -0.32%
2019 13.97% 27.47%
2018 -1.75% -11.18%
2017 5.5% 21.97%
2016 5.3% 15.68%
2015 0.88% -3.54%
2014 7.47% 12.29%
2013 -1.8% 0.0%
2012 11.36% 0.0%
2011 7.94% 0.0%
2010 10.65% 0.0%

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 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

VCIT vs. VLUE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCIT $10,000 $14,774 5.84%
VLUE $10,000 $17,247 8.91%

A $10,000 investment in VCIT would have resulted in a final balance of $14,774. This is a profit of $4,774 over 7 years and amounts to a compound annual growth rate (CAGR) of 5.84%.

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%.

VCIT’s CAGR is 3.07 percentage points lower than that of VLUE and as a result, would have yielded $2,473 less on a $10,000 investment. Thus, VCIT performed worse than VLUE by 3.07% annually.


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