The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the iShares S&P 500 Value ETF (IVE) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and IVE is a iShares Large Value fund. So, what’s the difference between VIG and IVE? And which fund is better?
The expense ratio of VIG is 0.12 percentage points lower than IVE’s (0.06% vs. 0.18%). VIG also has a higher exposure to the industrials sector and a lower standard deviation. Overall, VIG has provided higher returns than IVE over the past ten years.
In this article, we’ll compare VIG vs. IVE. We’ll look at portfolio growth and performance, as well as at their holdings and risk metrics. Moreover, I’ll also discuss VIG’s and IVE’s annual returns, industry exposure, and fund composition and examine how these affect their overall returns.
Summary
| VIG | IVE | |
| Name | Vanguard Dividend Appreciation Index Fund ETF Shares | iShares S&P 500 Value ETF |
| Category | Large Blend | Large Value |
| Issuer | Vanguard | iShares |
| AUM | 71.92B | 22.4B |
| Avg. Return | 13.35% | 11.68% |
| Div. Yield | 1.56% | 1.88% |
| Expense Ratio | 0.06% | 0.18% |
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 S&P 500 Value ETF (IVE) is a Large Value fund that is issued by iShares. It currently has 22.4B total assets under management and has yielded an average annual return of 11.68% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.18%.
VIG’s dividend yield is 0.32% lower than that of IVE (1.56% vs. 1.88%). Also, VIG yielded on average 1.66% more per year over the past decade (13.35% vs. 11.68%). The expense ratio of VIG is 0.12 percentage points lower than IVE’s (0.06% vs. 0.18%).
Fund Composition
Industry Exposure
| VIG | IVE | |
| Technology | 14.93% | 9.41% |
| Industrials | 17.23% | 12.19% |
| Energy | 0.0% | 5.43% |
| Communication Services | 2.86% | 6.4% |
| Utilities | 2.81% | 4.82% |
| Healthcare | 15.52% | 15.4% |
| Consumer Defensive | 15.32% | 9.23% |
| Real Estate | 0.0% | 4.38% |
| Financial Services | 17.18% | 22.06% |
| Consumer Cyclical | 10.47% | 7.68% |
| Basic Materials | 3.67% | 2.99% |
The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has the most exposure to the Industrials sector at 17.23%. This is followed by Financial Services and Healthcare at 17.18% and 15.52% respectively. Energy (0.0%), Utilities (2.81%), and Communication Services (2.86%) only make up 5.67% of the fund’s total assets.
VIG’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Cyclical, Technology, Consumer Defensive, and Healthcare stocks at 3.67%, 10.47%, 14.93%, 15.32%, and 15.52%.
The iShares S&P 500 Value ETF (IVE) has the most exposure to the Financial Services sector at 22.06%. This is followed by Healthcare and Industrials at 15.4% and 12.19% respectively. Real Estate (4.38%), Utilities (4.82%), and Energy (5.43%) only make up 14.63% of the fund’s total assets.
IVE’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Consumer Defensive, Technology, and Industrials stocks at 6.4%, 7.68%, 9.23%, 9.41%, and 12.19%.
VIG is 5.04% more exposed to the Industrials sector than IVE (17.23% vs 12.19%). VIG’s exposure to Financial Services and Healthcare stocks is 4.88% lower and 0.12% higher respectively (17.18% vs. 22.06% and 15.52% vs. 15.4%). In total, Energy, Utilities, and Communication Services also make up 10.98% less of the fund’s holdings compared to IVE (5.67% vs. 16.65%).
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%.
| IVE Holdings | Weight |
| Berkshire Hathaway Inc Class B | 3.05% |
| JPMorgan Chase & Co | 2.65% |
| The Walt Disney Co | 1.85% |
| Bank of America Corp | 1.67% |
| Johnson & Johnson | 1.57% |
| Exxon Mobil Corp | 1.41% |
| Pfizer Inc | 1.38% |
| Cisco Systems Inc | 1.35% |
| Verizon Communications Inc | 1.33% |
| Intel Corp | 1.25% |
IVE’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, The Walt Disney Co, Bank of America Corp, and Johnson & Johnson at 3.05%, 2.65%, 1.85%, 1.67%, and 1.57%.
Exxon Mobil Corp (1.41%), Pfizer Inc (1.38%), and Cisco Systems Inc (1.35%) have a slightly smaller but still significant weight. Verizon Communications Inc and Intel Corp are also represented in the IVE’s holdings at 1.33% and 1.25%.
Risk Analysis
| VIG | IVE | |
| Mean Return | 1.09 | 1.05 |
| R-squared | 92.2 | 92.08 |
| Std. Deviation | 12.25 | 14.3 |
| Alpha | 0.12 | -2.9 |
| Beta | 0.86 | 1.01 |
| Sharpe Ratio | 1.01 | 0.83 |
| Treynor Ratio | 14.33 | 11.41 |
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 R-squared of 92.2. Its Alpha is 0.12 while VIG’s Mean Return is 1.09. Furthermore, the fund has a Standard Deviation of 12.25 and a Beta of 0.86.
The iShares S&P 500 Value ETF (IVE) has a Mean Return of 1.05 with a R-squared of 92.08 and a Beta of 1.01. Its Alpha is -2.9 while IVE’s Sharpe Ratio is 0.83. Furthermore, the fund has a Treynor Ratio of 11.41 and a Standard Deviation of 14.3.
VIG’s Mean Return is 0.04 points higher than that of IVE and its R-squared is 0.12 points higher. With a Standard Deviation of 12.25, VIG is slightly less volatile than IVE. The Alpha and Beta of VIG are 3.02 points higher and 0.15 points lower than IVE’s Alpha and Beta.
Performance
Annual Returns
| Year | VIG | IVE |
| 2020 | 15.46% | 1.24% |
| 2019 | 29.71% | 31.71% |
| 2018 | -2.02% | -9.09% |
| 2017 | 22.22% | 15.19% |
| 2016 | 11.84% | 17.17% |
| 2015 | -1.95% | -3.24% |
| 2014 | 10.06% | 12.14% |
| 2013 | 28.99% | 31.69% |
| 2012 | 11.61% | 17.45% |
| 2011 | 6.21% | -0.63% |
| 2010 | 14.67% | 14.9% |
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 IVE, returning 31.71% on an annual basis. The poorest year for IVE in the last ten years was 2018, with a yield of -9.09%. Most years the iShares S&P 500 Value ETF has given investors modest returns, such as in 2014, 2010, and 2017, when gains were 12.14%, 14.9%, and 15.19% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VIG | $10,000 | $37,951 | 13.35% |
| IVE | $10,000 | $31,350 | 11.68% |
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 IVE, the end total would have been $31,350. This equates to a $21,350 profit over 11 years and a compound annual growth rate (CAGR) of 11.68%.
VIG’s CAGR is 1.66 percentage points higher than that of IVE and as a result, would have yielded $6,601 more on a $10,000 investment. Thus, VIG outperformed IVE by 1.66% annually.
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