The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and IUSB is a iShares N/A fund. So, what’s the difference between VIG and IUSB? And which fund is better?
VIG and IUSB have the same expense ratio: 0.06%. VIG also has a high exposure to the industrials sector while IUSB is mostly comprised of AAA bonds. Overall, VIG has provided higher returns than IUSB over the past ten years.
In this article, we’ll compare VIG vs. IUSB. We’ll look at industry exposure and holdings, as well as at their risk metrics and performance. Moreover, I’ll also discuss VIG’s and IUSB’s annual returns, fund composition, and portfolio growth and examine how these affect their overall returns.
Summary
| VIG | IUSB | |
| NameVanguard Dividend Appreciation Index Fund ETF SharesiShares Core Total USD Bond Market ETF | ||
| Category | Large Blend | N/A |
| Issuer | Vanguard | iShares |
| AUM | 71.92B | 14.49B |
| Avg. Return | 13.35% | 4.13% |
| Div. Yield | 1.56% | 2.1% |
| Expense Ratio | 0.06% | 0.06% |
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 Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.
VIG’s dividend yield is 0.54% lower than that of IUSB (1.56% vs. 2.1%). Also, VIG yielded on average 9.22% more per year over the past decade (13.35% vs. 4.13%). VIG and IUSB have the same expense ratio: 0.06%.
Fund Composition
Holdings
| VIG Holdings | Weight |
| Microsoft Corp | 4.19% |
| JPMorgan Chase & Co | 3.8% |
| Johnson & Johnson | 3.67% |
| Walmart Inc | 3.38% |
| 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% |
| Coca-Cola Co | 1.98% |
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%.
| IUSB Bond Sectors | Weight |
| AAA | 58.32% |
| BBB | 16.98% |
| A | 12.27% |
| BB | 4.33% |
| AA | 3.36% |
| B | 2.8% |
| Others | 1.01% |
| Below B | 0.92% |
| US Government | 0.0% |
IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.
Risk Analysis
| VIG | IUSB | |
| Mean Return | 1.09 | 0 |
| R-squared | 92.2 | 0 |
| Std. Deviation | 12.25 | 0 |
| Alpha | 0.12 | 0 |
| Beta | 0.86 | 0 |
| Sharpe Ratio | 1.01 | 0 |
| Treynor Ratio | 14.33 | 0 |
The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Mean Return of 1.09 with a Sharpe Ratio of 1.01 and a Standard Deviation of 12.25. Its R-squared is 92.2 while VIG’s Treynor Ratio is 14.33. Furthermore, the fund has a Beta of 0.86 and a Alpha of 0.12.
The iShares Core Total USD Bond Market ETF (IUSB) has a Treynor Ratio of 0 with a Mean Return of 0 and a R-squared of 0. Its Sharpe Ratio is 0 while IUSB’s Standard Deviation is 0. Furthermore, the fund has a Beta of 0 and a Alpha of 0.
VIG’s Mean Return is 1.09 points higher than that of IUSB and its R-squared is 92.20 points higher. With a Standard Deviation of 12.25, VIG is slightly more volatile than IUSB. The Alpha and Beta of VIG are 0.12 points higher and 0.86 points higher than IUSB’s Alpha and Beta.
Performance
Annual Returns
| Year | VIG | IUSB |
| 2020 | 15.46% | 7.59% |
| 2019 | 29.71% | 9.26% |
| 2018 | -2.02% | -0.38% |
| 2017 | 22.22% | 4.06% |
| 2016 | 11.84% | 3.78% |
| 2015 | -1.95% | 0.46% |
| 2014 | 10.06% | 0.0% |
| 2013 | 28.99% | 0.0% |
| 2012 | 11.61% | 0.0% |
| 2011 | 6.21% | 0.0% |
| 2010 | 14.67% | 0.0% |
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 IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VIG | $10,000 | $19,666 | 13.35% |
| IUSB | $10,000 | $12,704 | 4.13% |
A $10,000 investment in VIG would have resulted in a final balance of $19,666. This is a profit of $9,666 over 6 years and amounts to a compound annual growth rate (CAGR) of 13.35%.
With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.
VIG’s CAGR is 9.22 percentage points higher than that of IUSB and as a result, would have yielded $6,962 more on a $10,000 investment. Thus, VIG outperformed IUSB by 9.22% annually.
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