The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and IGSB is a iShares Short-Term Bond fund. So, what’s the difference between VIG and IGSB? And which fund is better?
VIG and IGSB have the same expense ratio: 0.06%. VIG also has a high exposure to the industrials sector while IGSB is mostly comprised of BBB bonds. Overall, VIG has provided higher returns than IGSB over the past ten years.
In this article, we’ll compare VIG vs. IGSB. We’ll look at fund composition and holdings, as well as at their annual returns and portfolio growth. Moreover, I’ll also discuss VIG’s and IGSB’s industry exposure, risk metrics, and performance and examine how these affect their overall returns.
|Name||Vanguard Dividend Appreciation Index Fund ETF Shares||iShares 1-5 Year Investment Grade Corporate Bond ETF|
|Category||Large Blend||Short-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 iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.
VIG’s dividend yield is 0.46% lower than that of IGSB (1.56% vs. 2.02%). Also, VIG yielded on average 10.84% more per year over the past decade (13.35% vs. 2.51%). VIG and IGSB have the same expense ratio: 0.06%.
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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%.
|IGSB Bond Sectors||Weight|
IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.
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The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Beta of 0.86 with a Treynor Ratio of 14.33 and a R-squared of 92.2. Its Standard Deviation is 12.25 while VIG’s Mean Return is 1.09. Furthermore, the fund has a Alpha of 0.12 and a Sharpe Ratio of 1.01.
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a R-squared of 26.13 with a Alpha of 0.69 and a Sharpe Ratio of 0.82. Its Standard Deviation is 2 while IGSB’s Mean Return is 0.19. Furthermore, the fund has a Treynor Ratio of 4.82 and a Beta of 0.34.
VIG’s Mean Return is 0.90 points higher than that of IGSB and its R-squared is 66.07 points higher. With a Standard Deviation of 12.25, VIG is slightly more volatile than IGSB. The Alpha and Beta of VIG are 0.57 points lower and 0.52 points higher than IGSB’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 2019 was the strongest year for IGSB, returning 7.01% on an annual basis. The poorest year for IGSB in the last ten years was 2015, with a yield of 0.7%. Most years the iShares 1-5 Year Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2011, 2017, and 2016, when gains were 1.34%, 1.41%, and 1.77% 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 IGSB, the end total would have been $13,103. This equates to a $3,103 profit over 11 years and a compound annual growth rate (CAGR) of 2.51%.
VIG’s CAGR is 10.84 percentage points higher than that of IGSB and as a result, would have yielded $24,848 more on a $10,000 investment. Thus, VIG outperformed IGSB by 10.84% annually.
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