VCIT vs. VOE: What’s The Difference?

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

The expense ratio of VCIT is 0.02 percentage points lower than VOE’s (0.05% vs. 0.07%). VCIT is mostly comprised of BBB bonds while VOE has a high exposure to the financial services sector. Overall, VCIT has provided lower returns than VOE over the past ten years.

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

Summary

VCIT VOE
Name Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares Vanguard Mid-Cap Value Index Fund ETF Shares
Category Corporate Bond Mid-Cap Value
Issuer Vanguard Vanguard
AUM 48.39B 26.78B
Avg. Return 5.84% 12.52%
Div. Yield 2.33% 1.87%
Expense Ratio 0.05% 0.07%

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 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%.

VCIT’s dividend yield is 0.46% higher than that of VOE (2.33% vs. 1.87%). Also, VCIT yielded on average 6.68% less per year over the past decade (5.84% vs. 12.52%). The expense ratio of VCIT is 0.02 percentage points lower than VOE’s (0.05% vs. 0.07%).

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.

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%.

Risk Analysis

VCIT VOE
Mean Return 0.44 1.05
R-squared 63.18 88.76
Std. Deviation 5.08 15.98
Alpha 0.89 -3.77
Beta 1.35 1.11
Sharpe Ratio 0.91 0.75
Treynor Ratio 3.43 10.19

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

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

VCIT’s Mean Return is 0.61 points lower than that of VOE and its R-squared is 25.58 points lower. With a Standard Deviation of 5.08, VCIT is slightly less volatile than VOE. The Alpha and Beta of VCIT are 4.66 points higher and 0.24 points higher than VOE’s Alpha and Beta.

Performance

Annual Returns

VCIT vs. VOE - Annual Returns

Year VCIT VOE
2020 9.55% 2.5%
2019 13.97% 27.98%
2018 -1.75% -12.41%
2017 5.5% 17.05%
2016 5.3% 15.26%
2015 0.88% -1.8%
2014 7.47% 13.98%
2013 -1.8% 37.65%
2012 11.36% 16.04%
2011 7.94% -0.32%
2010 10.65% 21.83%

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 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

VCIT vs. VOE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VCIT $10,000 $17,439 5.84%
VOE $10,000 $27,625 12.52%

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 VOE, the end total would have been $27,625. This equates to a $17,625 profit over 10 years and a compound annual growth rate (CAGR) of 12.52%.

VCIT’s CAGR is 6.68 percentage points lower than that of VOE and as a result, would have yielded $10,186 less on a $10,000 investment. Thus, VCIT performed worse than VOE by 6.68% annually.


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