The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between VIG and BIV? And which fund is better?
The expense ratio of VIG is 0.01 percentage points higher than BIV’s (0.06% vs. 0.05%). VIG also has a high exposure to the industrials sector while BIV is mostly comprised of AAA bonds. Overall, VIG has provided higher returns than BIV over the past ten years.
In this article, we’ll compare VIG vs. BIV. We’ll look at annual returns and portfolio growth, as well as at their performance and risk metrics. Moreover, I’ll also discuss VIG’s and BIV’s industry exposure, holdings, and fund composition and examine how these affect their overall returns.
|Name||Vanguard Dividend Appreciation Index Fund ETF Shares||Vanguard Intermediate-Term Bond Index Fund ETF Shares|
|Category||Large Blend||Intermediate-Term Bond|
The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) is a Large Blend fund that is issued by Vanguard. It currently has 71.92B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.56% with an expense ratio of 0.06%.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.
VIG’s dividend yield is 0.50% lower than that of BIV (1.56% vs. 2.06%). Also, VIG yielded on average 8.03% more per year over the past decade (13.35% vs. 5.31%). The expense ratio of VIG is 0.01 percentage points higher than BIV’s (0.06% vs. 0.05%).
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|JPMorgan Chase & Co||3.8%|
|Johnson & Johnson||3.67%|
|Visa Inc Class A||3.22%|
|UnitedHealth Group Inc||3.22%|
|The Home Depot Inc||2.91%|
|Procter & Gamble Co||2.82%|
|Comcast Corp Class A||2.21%|
VIG’s Top Holdings are Microsoft Corp, JPMorgan Chase & Co, Johnson & Johnson, Walmart Inc, and Visa Inc Class A at 4.19%, 3.8%, 3.67%, 3.38%, and 3.22%.
UnitedHealth Group Inc (3.22%), The Home Depot Inc (2.91%), and Procter & Gamble Co (2.82%) have a slightly smaller but still significant weight. Comcast Corp Class A and Coca-Cola Co are also represented in the VIG’s holdings at 2.21% and 1.98%.
|BIV Bond Sectors||Weight|
BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.
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The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Alpha of 0.12 with a Sharpe Ratio of 1.01 and a Treynor Ratio of 14.33. Its Beta is 0.86 while VIG’s Mean Return is 1.09. Furthermore, the fund has a Standard Deviation of 12.25 and a R-squared of 92.2.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Beta of 1.33 with a Alpha of -0.07 and a Mean Return of 0.35. Its R-squared is 95.12 while BIV’s Standard Deviation is 4.09. Furthermore, the fund has a Treynor Ratio of 2.72 and a Sharpe Ratio of 0.89.
VIG’s Mean Return is 0.74 points higher than that of BIV and its R-squared is 2.92 points lower. With a Standard Deviation of 12.25, VIG is slightly more volatile than BIV. The Alpha and Beta of VIG are 0.19 points higher and 0.47 points lower than BIV’s Alpha and Beta.
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VIG had its best year in 2019 with an annual return of 29.71%. VIG’s worst year over the past decade yielded -2.02% and occurred in 2018. In most years the Vanguard Dividend Appreciation Index Fund ETF Shares provided moderate returns such as in 2012, 2016, and 2010 where annual returns amounted to 11.61%, 11.84%, and 14.67% respectively.
The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VIG would have resulted in a final balance of $37,951. This is a profit of $27,951 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.35%.
With a $10,000 investment in BIV, the end total would have been $17,492. This equates to a $7,492 profit over 11 years and a compound annual growth rate (CAGR) of 5.31%.
VIG’s CAGR is 8.03 percentage points higher than that of BIV and as a result, would have yielded $20,459 more on a $10,000 investment. Thus, VIG outperformed BIV by 8.03% annually.
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