The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the SPDR S&P Dividend ETF (SDY) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and SDY is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between VIG and SDY? And which fund is better?
The expense ratio of VIG is 0.29 percentage points lower than SDY’s (0.06% vs. 0.35%). VIG also has a higher exposure to the industrials sector and a lower standard deviation. Overall, VIG has provided higher returns than SDY over the past ten years.
In this article, we’ll compare VIG vs. SDY. We’ll look at performance and holdings, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss VIG’s and SDY’s fund composition, annual returns, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Dividend Appreciation Index Fund ETF Shares||SPDR S&P Dividend ETF|
|Category||Large Blend||Large Value|
|Issuer||Vanguard||SPDR State Street Global Advisors|
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 SPDR S&P Dividend ETF (SDY) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 19.67B total assets under management and has yielded an average annual return of 12.44% over the past 10 years. The fund has a dividend yield of 2.65% with an expense ratio of 0.35%.
VIG’s dividend yield is 1.09% lower than that of SDY (1.56% vs. 2.65%). Also, VIG yielded on average 0.91% more per year over the past decade (13.35% vs. 12.44%). The expense ratio of VIG is 0.29 percentage points lower than SDY’s (0.06% vs. 0.35%).
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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 SPDR S&P Dividend ETF (SDY) has the most exposure to the Financial Services sector at 16.32%. This is followed by Industrials and Consumer Defensive at 15.89% and 14.01% respectively. Communication Services (4.64%), Energy (5.95%), and Basic Materials (6.45%) only make up 17.04% of the fund’s total assets.
SDY’s mid-section with moderate exposure is comprised of Real Estate, Healthcare, Consumer Cyclical, Utilities, and Consumer Defensive stocks at 6.57%, 7.35%, 8.68%, 12.14%, and 14.01%.
VIG is 1.34% more exposed to the Industrials sector than SDY (17.23% vs 15.89%). VIG’s exposure to Financial Services and Healthcare stocks is 0.86% higher and 8.17% higher respectively (17.18% vs. 16.32% and 15.52% vs. 7.35%). In total, Energy, Utilities, and Communication Services also make up 17.06% less of the fund’s holdings compared to SDY (5.67% vs. 22.73%).
|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%.
|Exxon Mobil Corp||2.81%|
|South Jersey Industries Inc||2.22%|
|International Business Machines Corp||2.0%|
|National Retail Properties Inc||1.86%|
|Federal Realty Investment Trust||1.77%|
|Realty Income Corp||1.7%|
|Old Republic International Corp||1.65%|
SDY’s Top Holdings are Exxon Mobil Corp, AT&T Inc, South Jersey Industries Inc, Chevron Corp, and International Business Machines Corp at 2.81%, 2.5%, 2.22%, 2.02%, and 2.0%.
AbbVie Inc (1.93%), National Retail Properties Inc (1.86%), and Federal Realty Investment Trust (1.77%) have a slightly smaller but still significant weight. Realty Income Corp and Old Republic International Corp are also represented in the SDY’s holdings at 1.7% and 1.65%.
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The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Standard Deviation of 12.25 with a R-squared of 92.2 and a Mean Return of 1.09. Its Beta is 0.86 while VIG’s Sharpe Ratio is 1.01. Furthermore, the fund has a Alpha of 0.12 and a Treynor Ratio of 14.33.
The SPDR S&P Dividend ETF (SDY) has a Sharpe Ratio of 0.95 with a Treynor Ratio of 13.94 and a Mean Return of 1.07. Its Beta is 0.87 while SDY’s Alpha is -0.1. Furthermore, the fund has a R-squared of 83.62 and a Standard Deviation of 12.9.
VIG’s Mean Return is 0.02 points higher than that of SDY and its R-squared is 8.58 points higher. With a Standard Deviation of 12.25, VIG is slightly less volatile than SDY. The Alpha and Beta of VIG are 0.22 points higher and 0.01 points lower than SDY’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 2013 was the strongest year for SDY, returning 30.09% on an annual basis. The poorest year for SDY in the last ten years was 2018, with a yield of -2.73%. Most years the SPDR S&P Dividend ETF has given investors modest returns, such as in 2012, 2014, and 2017, when gains were 11.51%, 13.8%, and 15.84% 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 SDY, the end total would have been $34,806. This equates to a $24,806 profit over 11 years and a compound annual growth rate (CAGR) of 12.44%.
VIG’s CAGR is 0.91 percentage points higher than that of SDY and as a result, would have yielded $3,145 more on a $10,000 investment. Thus, VIG outperformed SDY by 0.91% annually.
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