The Vanguard Health Care Index Fund ETF Shares (VHT) and the iShares MSCI USA Value Factor ETF (VLUE) are both among the Top 100 ETFs. VHT is a Vanguard Health fund and VLUE is a iShares Large Value fund. So, what’s the difference between VHT and VLUE? And which fund is better?
The expense ratio of VHT is 0.05 percentage points lower than VLUE’s (0.1% vs. 0.15%). VHT also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, VHT has provided higher returns than VLUE over the past 7 years.
In this article, we’ll compare VHT vs. VLUE. We’ll look at annual returns and industry exposure, as well as at their holdings and risk metrics. Moreover, I’ll also discuss VHT’s and VLUE’s performance, portfolio growth, and fund composition and examine how these affect their overall returns.
|Name||Vanguard Health Care Index Fund ETF Shares||iShares MSCI USA Value Factor ETF|
The Vanguard Health Care Index Fund ETF Shares (VHT) is a Health fund that is issued by Vanguard. It currently has 17.94B total assets under management and has yielded an average annual return of 16.04% over the past 10 years. The fund has a dividend yield of 1.15% with an expense ratio of 0.1%.
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%.
VHT’s dividend yield is 0.74% lower than that of VLUE (1.15% vs. 1.89%). Also, VHT yielded on average 7.13% more per year over the past decade (16.04% vs. 8.91%). The expense ratio of VHT is 0.05 percentage points lower than VLUE’s (0.1% vs. 0.15%).
The Vanguard Health Care Index Fund ETF Shares (VHT) has the most exposure to the Healthcare sector at 99.57%. This is followed by Basic Materials and Technology at 0.31% and 0.05% respectively. Real Estate (0.0%), Consumer Defensive (0.0%), and Utilities (0.0%) only make up 0.00% of the fund’s total assets.
VHT’s mid-section with moderate exposure is comprised of Communication Services, Energy, Financial Services, Industrials, and Technology stocks at 0.0%, 0.0%, 0.02%, 0.05%, and 0.05%.
The iShares MSCI USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.
VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.
VHT is 85.26% more exposed to the Healthcare sector than VLUE (99.57% vs 14.31%). VHT’s exposure to Basic Materials and Technology stocks is 1.83% lower and 26.84% lower respectively (0.31% vs. 2.14% and 0.05% vs. 26.89%). In total, Real Estate, Consumer Defensive, and Utilities also make up 13.09% less of the fund’s holdings compared to VLUE (0.00% vs. 13.09%).
|Johnson & Johnson||7.34%|
|UnitedHealth Group Inc||6.44%|
|Thermo Fisher Scientific Inc||3.37%|
|Merck & Co Inc||3.33%|
|Eli Lilly and Co||3.17%|
VHT’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and Thermo Fisher Scientific Inc at 7.34%, 6.44%, 3.7%, 3.48%, and 3.37%.
AbbVie Inc (3.37%), Merck & Co Inc (3.33%), and Eli Lilly and Co (3.17%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the VHT’s holdings at 2.91% and 2.83%.
|General Motors Co||3.19%|
|Micron Technology Inc||3.14%|
|Cisco Systems Inc||3.05%|
|International Business Machines Corp||2.76%|
|Ford Motor Co||2.23%|
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%.
The Vanguard Health Care Index Fund ETF Shares (VHT) has a Sharpe Ratio of 1.13 with a Mean Return of 1.33 and a Treynor Ratio of 20.74. Its Standard Deviation is 13.58 while VHT’s R-squared is 59.86. Furthermore, the fund has a Beta of 0.75 and a Alpha of 7.99.
The iShares MSCI USA Value Factor ETF (VLUE) has a Alpha of 0 with a Beta of 0 and a Treynor Ratio of 0. Its R-squared is 0 while VLUE’s Sharpe Ratio is 0. Furthermore, the fund has a Mean Return of 0 and a Standard Deviation of 0.
VHT’s Mean Return is 1.33 points higher than that of VLUE and its R-squared is 59.86 points higher. With a Standard Deviation of 13.58, VHT is slightly more volatile than VLUE. The Alpha and Beta of VHT are 7.99 points higher and 0.75 points higher than VLUE’s Alpha and Beta.
VHT had its best year in 2013 with an annual return of 42.67%. VHT’s worst year over the past decade yielded -3.33% and occurred in 2016. In most years the Vanguard Health Care Index Fund ETF Shares provided moderate returns such as in 2011, 2020, and 2012 where annual returns amounted to 10.57%, 18.21%, and 19.1% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VHT would have resulted in a final balance of $24,392. This is a profit of $14,392 over 7 years and amounts to a compound annual growth rate (CAGR) of 16.04%.
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%.
VHT’s CAGR is 7.13 percentage points higher than that of VLUE and as a result, would have yielded $7,145 more on a $10,000 investment. Thus, VHT outperformed VLUE by 7.13% annually.
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