The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between VIG and VBK? And which fund is better?
The expense ratio of VIG is 0.01 percentage points lower than VBK’s (0.06% vs. 0.07%). VIG also has a higher exposure to the industrials sector and a lower standard deviation. Overall, VIG has provided lower returns than VBK over the past ten years.
In this article, we’ll compare VIG vs. VBK. We’ll look at holdings and annual returns, as well as at their portfolio growth and fund composition. Moreover, I’ll also discuss VIG’s and VBK’s industry exposure, performance, and risk metrics and examine how these affect their overall returns.
|Name||Vanguard Dividend Appreciation Index Fund ETF Shares||Vanguard Small-Cap Growth Index Fund ETF Shares|
|Category||Large Blend||Small Growth|
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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.
VIG’s dividend yield is 1.11% higher than that of VBK (1.56% vs. 0.45%). Also, VIG yielded on average 3.18% less per year over the past decade (13.35% vs. 16.53%). The expense ratio of VIG is 0.01 percentage points lower than VBK’s (0.06% vs. 0.07%).
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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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.
VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.
VIG is 4.04% more exposed to the Industrials sector than VBK (17.23% vs 13.19%). VIG’s exposure to Financial Services and Healthcare stocks is 13.13% higher and 7.72% lower respectively (17.18% vs. 4.05% and 15.52% vs. 23.24%). In total, Energy, Utilities, and Communication Services also make up 0.34% more of the fund’s holdings compared to VBK (5.67% vs. 5.33%).
|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%.
|Charles River Laboratories International Inc||0.78%|
|Fair Isaac Corp||0.57%|
|Bill.com Holdings Inc Ordinary Shares||0.56%|
VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.
Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.
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The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Sharpe Ratio of 1.01 with a Standard Deviation of 12.25 and a R-squared of 92.2. Its Treynor Ratio is 14.33 while VIG’s Alpha is 0.12. Furthermore, the fund has a Mean Return of 1.09 and a Beta of 0.86.
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Beta of 1.18 with a Treynor Ratio of 11.18 and a R-squared of 80.56. Its Sharpe Ratio is 0.78 while VBK’s Alpha is -2.81. Furthermore, the fund has a Standard Deviation of 17.95 and a Mean Return of 1.22.
VIG’s Mean Return is 0.13 points lower than that of VBK and its R-squared is 11.64 points higher. With a Standard Deviation of 12.25, VIG is slightly less volatile than VBK. The Alpha and Beta of VIG are 2.93 points higher and 0.32 points lower than VBK’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 VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% 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 VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.
VIG’s CAGR is 3.18 percentage points lower than that of VBK and as a result, would have yielded $10,688 less on a $10,000 investment. Thus, VIG performed worse than VBK by 3.18% annually.
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