The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and IEF is a iShares Long Government fund. So, what’s the difference between VIG and IEF? And which fund is better?
The expense ratio of VIG is 0.09 percentage points lower than IEF’s (0.06% vs. 0.15%). VIG also has a high exposure to the industrials sector while IEF is mostly comprised of AAA bonds. Overall, VIG has provided higher returns than IEF over the past ten years.
In this article, we’ll compare VIG vs. IEF. We’ll look at performance and industry exposure, as well as at their holdings and fund composition. Moreover, I’ll also discuss VIG’s and IEF’s risk metrics, annual returns, and portfolio growth and examine how these affect their overall returns.
|NameVanguard Dividend Appreciation Index Fund ETF SharesiShares 7-10 Year Treasury Bond ETF|
|Category||Large Blend||Long Government|
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 iShares 7-10 Year Treasury Bond ETF (IEF) is a Long Government fund that is issued by iShares. It currently has 13.44B total assets under management and has yielded an average annual return of 5.06% over the past 10 years. The fund has a dividend yield of 0.84% with an expense ratio of 0.15%.
VIG’s dividend yield is 0.72% higher than that of IEF (1.56% vs. 0.84%). Also, VIG yielded on average 8.28% more per year over the past decade (13.35% vs. 5.06%). The expense ratio of VIG is 0.09 percentage points lower than IEF’s (0.06% vs. 0.15%).
|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%.
|IEF Bond Sectors||Weight|
IEF’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Sharpe Ratio of 1.01 with a Treynor Ratio of 14.33 and a Mean Return of 1.09. Its R-squared is 92.2 while VIG’s Alpha is 0.12. Furthermore, the fund has a Beta of 0.86 and a Standard Deviation of 12.25.
The iShares 7-10 Year Treasury Bond ETF (IEF) has a Treynor Ratio of 1.97 with a Beta of 1.59 and a Alpha of -1.2. Its R-squared is 77.56 while IEF’s Mean Return is 0.32. Furthermore, the fund has a Sharpe Ratio of 0.6 and a Standard Deviation of 5.42.
VIG’s Mean Return is 0.77 points higher than that of IEF and its R-squared is 14.64 points higher. With a Standard Deviation of 12.25, VIG is slightly more volatile than IEF. The Alpha and Beta of VIG are 1.32 points higher and 0.73 points lower than IEF’s Alpha and Beta.
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 IEF, returning 15.46% on an annual basis. The poorest year for IEF in the last ten years was 2013, with a yield of -6.12%. Most years the iShares 7-10 Year Treasury Bond ETF has given investors modest returns, such as in 2017, 2012, and 2019, when gains were 2.47%, 4.06%, and 8.38% 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 IEF, the end total would have been $16,936. This equates to a $6,936 profit over 11 years and a compound annual growth rate (CAGR) of 5.06%.
VIG’s CAGR is 8.28 percentage points higher than that of IEF and as a result, would have yielded $21,015 more on a $10,000 investment. Thus, VIG outperformed IEF by 8.28% annually.
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