The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the Vanguard Small-Cap Value Index Fund ETF Shares (VBR) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and VBR is a Vanguard Small Value fund. So, what’s the difference between VIG and VBR? And which fund is better?
The expense ratio of VIG is 0.01 percentage points lower than VBR’s (0.06% vs. 0.07%). VIG also has a lower exposure to the industrials sector and a lower standard deviation. Overall, VIG has provided higher returns than VBR over the past ten years.
In this article, we’ll compare VIG vs. VBR. We’ll look at holdings and risk metrics, as well as at their annual returns and performance. Moreover, I’ll also discuss VIG’s and VBR’s portfolio growth, industry exposure, and fund composition and examine how these affect their overall returns.
|Name||Vanguard Dividend Appreciation Index Fund ETF Shares||Vanguard Small-Cap Value Index Fund ETF Shares|
|Category||Large Blend||Small Value|
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 Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.
VIG’s dividend yield is 0.04% lower than that of VBR (1.56% vs. 1.6%). Also, VIG yielded on average 1.06% more per year over the past decade (13.35% vs. 12.28%). The expense ratio of VIG is 0.01 percentage points lower than VBR’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 Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.
VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.
VIG is 1.21% less exposed to the Industrials sector than VBR (17.23% vs 18.44%). VIG’s exposure to Financial Services and Healthcare stocks is 2.86% lower and 8.36% higher respectively (17.18% vs. 20.04% and 15.52% vs. 7.16%). In total, Energy, Utilities, and Communication Services also make up 4.90% less of the fund’s holdings compared to VBR (5.67% vs. 10.57%).
|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%.
|Diamondback Energy Inc||0.55%|
|VICI Properties Inc Ordinary Shares||0.54%|
|Nuance Communications Inc||0.5%|
|Molina Healthcare Inc||0.48%|
|Howmet Aerospace Inc||0.44%|
|Apollo Global Management Inc Class A||0.42%|
|Brown & Brown Inc||0.41%|
VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.
Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.
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The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Sharpe Ratio of 1.01 with a R-squared of 92.2 and a Alpha of 0.12. Its Treynor Ratio is 14.33 while VIG’s Standard Deviation is 12.25. Furthermore, the fund has a Mean Return of 1.09 and a Beta of 0.86.
The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Mean Return of 1.08 with a Standard Deviation of 18.37 and a Beta of 1.23. Its Alpha is -5.09 while VBR’s Sharpe Ratio is 0.67. Furthermore, the fund has a R-squared of 82.2 and a Treynor Ratio of 9.15.
VIG’s Mean Return is 0.01 points higher than that of VBR and its R-squared is 10.00 points higher. With a Standard Deviation of 12.25, VIG is slightly less volatile than VBR. The Alpha and Beta of VIG are 5.21 points higher and 0.37 points lower than VBR’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 VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% 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 VBR, the end total would have been $32,611. This equates to a $22,611 profit over 11 years and a compound annual growth rate (CAGR) of 12.28%.
VIG’s CAGR is 1.06 percentage points higher than that of VBR and as a result, would have yielded $5,340 more on a $10,000 investment. Thus, VIG outperformed VBR by 1.06% annually.
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