The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the iShares MSCI USA Value Factor ETF (VLUE) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and VLUE is a iShares Large Value fund. So, what’s the difference between VIG and VLUE? And which fund is better?
The expense ratio of VIG is 0.09 percentage points lower than VLUE’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 higher returns than VLUE over the past ten years.
In this article, we’ll compare VIG vs. VLUE. We’ll look at annual returns and risk metrics, as well as at their industry exposure and fund composition. Moreover, I’ll also discuss VIG’s and VLUE’s holdings, portfolio growth, and performance and examine how these affect their overall returns.
|Name||Vanguard Dividend Appreciation Index Fund ETF Shares||iShares MSCI USA Value Factor ETF|
|Category||Large Blend||Large 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 iShares MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.
VIG’s dividend yield is 0.33% lower than that of VLUE (1.56% vs. 1.89%). Also, VIG yielded on average 4.44% more per year over the past decade (13.35% vs. 8.91%). The expense ratio of VIG is 0.09 percentage points lower than VLUE’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 Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.
VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.
VIG is 8.09% more exposed to the Industrials sector than VLUE (17.23% vs 9.14%). VIG’s exposure to Financial Services and Healthcare stocks is 6.22% higher and 1.21% higher respectively (17.18% vs. 10.96% and 15.52% vs. 14.31%). In total, Energy, Utilities, and Communication Services also make up 9.82% less of the fund’s holdings compared to VLUE (5.67% vs. 15.49%).
|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%.
|General Motors Co||3.19%|
|Micron Technology Inc||3.14%|
|Cisco Systems Inc||3.05%|
|International Business Machines Corp||2.76%|
|Ford Motor Co||2.23%|
VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.
International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.
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The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Standard Deviation of 12.25 with a Treynor Ratio of 14.33 and a R-squared of 92.2. Its Alpha is 0.12 while VIG’s Beta is 0.86. Furthermore, the fund has a Sharpe Ratio of 1.01 and a Mean Return of 1.09.
The iShares MSCI USA Value Factor ETF (VLUE) has a R-squared of 0 with a Standard Deviation of 0 and a Treynor Ratio of 0. Its Mean Return is 0 while VLUE’s Sharpe Ratio is 0. Furthermore, the fund has a Alpha of 0 and a Beta of 0.
VIG’s Mean Return is 1.09 points higher than that of VLUE and its R-squared is 92.20 points higher. With a Standard Deviation of 12.25, VIG is slightly more volatile than VLUE. The Alpha and Beta of VIG are 0.12 points higher and 0.86 points higher than VLUE’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 VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VIG would have resulted in a final balance of $21,645. This is a profit of $11,645 over 7 years and amounts to a compound annual growth rate (CAGR) of 13.35%.
With a $10,000 investment in VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.
VIG’s CAGR is 4.44 percentage points higher than that of VLUE and as a result, would have yielded $4,398 more on a $10,000 investment. Thus, VIG outperformed VLUE by 4.44% annually.
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