The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the iShares MSCI USA Min Vol Factor ETF (USMV) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and USMV is a iShares Large Blend fund. So, what’s the difference between VIG and USMV? And which fund is better?
The expense ratio of VIG is 0.09 percentage points lower than USMV’s (0.06% vs. 0.15%). VIG also has a higher exposure to the industrials sector and a higher standard deviation. Overall, VIG has provided lower returns than USMV over the past ten years.
In this article, we’ll compare VIG vs. USMV. We’ll look at industry exposure and portfolio growth, as well as at their annual returns and fund composition. Moreover, I’ll also discuss VIG’s and USMV’s performance, risk metrics, and holdings and examine how these affect their overall returns.
|Name||Vanguard Dividend Appreciation Index Fund ETF Shares||iShares MSCI USA Min Vol Factor ETF|
|Category||Large Blend||Large Blend|
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 MSCI USA Min Vol Factor ETF (USMV) is a Large Blend fund that is issued by iShares. It currently has 27.6B total assets under management and has yielded an average annual return of 13.89% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.
VIG’s dividend yield is 0.06% higher than that of USMV (1.56% vs. 1.5%). Also, VIG yielded on average 0.55% less per year over the past decade (13.35% vs. 13.89%). The expense ratio of VIG is 0.09 percentage points lower than USMV’s (0.06% vs. 0.15%).
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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 iShares MSCI USA Min Vol Factor ETF (USMV) has the most exposure to the Technology sector at 20.53%. This is followed by Healthcare and Consumer Defensive at 18.42% and 12.82% respectively. Basic Materials (1.65%), Real Estate (2.73%), and Consumer Cyclical (5.53%) only make up 9.91% of the fund’s total assets.
USMV’s mid-section with moderate exposure is comprised of Utilities, Financial Services, Industrials, Communication Services, and Consumer Defensive stocks at 6.93%, 9.65%, 10.51%, 11.03%, and 12.82%.
VIG is 6.72% more exposed to the Industrials sector than USMV (17.23% vs 10.51%). VIG’s exposure to Financial Services and Healthcare stocks is 7.53% higher and 2.90% lower respectively (17.18% vs. 9.65% and 15.52% vs. 18.42%). In total, Energy, Utilities, and Communication Services also make up 12.50% less of the fund’s holdings compared to USMV (5.67% vs. 18.17%).
|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%.
|Eli Lilly and Co||1.64%|
|T-Mobile US Inc||1.51%|
|Accenture PLC Class A||1.51%|
|Visa Inc Class A||1.49%|
|Waste Management Inc||1.45%|
|The Kroger Co||1.44%|
|Johnson & Johnson||1.42%|
|Gilead Sciences Inc||1.42%|
USMV’s Top Holdings are Eli Lilly and Co, Microsoft Corp, T-Mobile US Inc, Accenture PLC Class A, and Visa Inc Class A at 1.64%, 1.62%, 1.51%, 1.51%, and 1.49%.
Waste Management Inc (1.45%), Adobe Inc (1.45%), and The Kroger Co (1.44%) have a slightly smaller but still significant weight. Johnson & Johnson and Gilead Sciences Inc are also represented in the USMV’s holdings at 1.42% and 1.42%.
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The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Alpha of 0.12 with a Standard Deviation of 12.25 and a Mean Return of 1.09. Its R-squared is 92.2 while VIG’s Sharpe Ratio is 1.01. Furthermore, the fund has a Beta of 0.86 and a Treynor Ratio of 14.33.
The iShares MSCI USA Min Vol Factor ETF (USMV) has a Beta of 0 with a R-squared of 0 and a Alpha of 0. Its Standard Deviation is 0 while USMV’s Sharpe Ratio is 0. Furthermore, the fund has a Mean Return of 0 and a Treynor Ratio of 0.
VIG’s Mean Return is 1.09 points higher than that of USMV and its R-squared is 92.20 points higher. With a Standard Deviation of 12.25, VIG is slightly more volatile than USMV. The Alpha and Beta of VIG are 0.12 points higher and 0.86 points higher than USMV’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 USMV, returning 27.77% on an annual basis. The poorest year for USMV in the last ten years was 2011, with a yield of 0.0%. Most years the iShares MSCI USA Min Vol Factor ETF has given investors modest returns, such as in 2020, 2016, and 2012, when gains were 5.6%, 10.5%, and 11.04% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VIG would have resulted in a final balance of $27,919. This is a profit of $17,919 over 8 years and amounts to a compound annual growth rate (CAGR) of 13.35%.
With a $10,000 investment in USMV, the end total would have been $27,607. This equates to a $17,607 profit over 8 years and a compound annual growth rate (CAGR) of 13.89%.
VIG’s CAGR is 0.55 percentage points lower than that of USMV and as a result, would have yielded $312 more on a $10,000 investment. Thus, VIG performed worse than USMV by 0.55% annually.
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