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VLUE vs. GOVT: What’s The Difference?

The iShares MSCI USA Value Factor ETF (VLUE) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. VLUE is a iShares Large Value fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between VLUE and GOVT? And which fund is better?

The expense ratio of VLUE is 0.10 percentage points higher than GOVT’s (0.15% vs. 0.05%). VLUE also has a high exposure to the technology sector while GOVT is mostly comprised of AAA bonds. Overall, VLUE has provided higher returns than GOVT over the past 7 years.

In this article, we’ll compare VLUE vs. GOVT. We’ll look at industry exposure and risk metrics, as well as at their fund composition and holdings. Moreover, I’ll also discuss VLUE’s and GOVT’s performance, portfolio growth, and annual returns and examine how these affect their overall returns.

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Summary

VLUEGOVT
NameiShares MSCI USA Value Factor ETFiShares U.S. Treasury Bond ETF
CategoryLarge ValueIntermediate Government
IssueriSharesiShares
AUM15.95B17.07B
Avg. Return8.91%2.67%
Div. Yield1.89%1.0%
Expense Ratio0.15%0.05%

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%.

The iShares U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.

VLUE’s dividend yield is 0.89% higher than that of GOVT (1.89% vs. 1.0%). Also, VLUE yielded on average 6.24% more per year over the past decade (8.91% vs. 2.67%). The expense ratio of VLUE is 0.10 percentage points higher than GOVT’s (0.15% vs. 0.05%).

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Fund Composition

Holdings

VLUE - Holdings

VLUE HoldingsWeight
AT&T Inc7.13%
Intel Corp6.14%
General Motors Co3.19%
Micron Technology Inc3.14%
Cisco Systems Inc3.05%
International Business Machines Corp2.76%
Target Corp2.38%
Citigroup Inc2.32%
Ford Motor Co2.23%
Pfizer Inc2.17%

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%.

GOVT - Holdings

GOVT Bond SectorsWeight
AAA100.0%
Others0.0%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

GOVT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.

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Risk Analysis

VLUEGOVT
Mean Return00
R-squared00
Std. Deviation00
Alpha00
Beta00
Sharpe Ratio00
Treynor Ratio00

The iShares MSCI USA Value Factor ETF (VLUE) has a Sharpe Ratio of 0 with a Treynor Ratio of 0 and a Beta of 0. Its Standard Deviation is 0 while VLUE’s Mean Return is 0. Furthermore, the fund has a Alpha of 0 and a R-squared of 0.

The iShares U.S. Treasury Bond ETF (GOVT) has a Mean Return of 0 with a Beta of 0 and a Sharpe Ratio of 0. Its R-squared is 0 while GOVT’s Standard Deviation is 0. Furthermore, the fund has a Alpha of 0 and a Treynor Ratio of 0.

VLUE’s Mean Return is 0.00 points lower than that of GOVT and its R-squared is 0.00 points lower. With a Standard Deviation of 0, VLUE is slightly less volatile than GOVT. The Alpha and Beta of VLUE are 0.00 points lower and 0.00 points lower than GOVT’s Alpha and Beta.

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Performance

Annual Returns

VLUE vs. GOVT - Annual Returns

YearVLUEGOVT
2020-0.32%7.92%
201927.47%6.71%
2018-11.18%0.74%
201721.97%2.19%
201615.68%0.92%
2015-3.54%0.76%
201412.29%4.99%
20130.0%-2.84%
20120.0%0.0%
20110.0%0.0%
20100.0%0.0%

VLUE had its best year in 2019 with an annual return of 27.47%. VLUE’s worst year over the past decade yielded -11.18% and occurred in 2018. In most years the iShares MSCI USA Value Factor ETF provided moderate returns such as in 2012, 2011, and 2010 where annual returns amounted to 0.0%, 0.0%, and 0.0% respectively.

The year 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.

Portfolio Growth

VLUE vs. GOVT - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VLUE$10,000$17,2478.91%
GOVT$10,000$12,6562.67%

A $10,000 investment in VLUE would have resulted in a final balance of $17,247. This is a profit of $7,247 over 7 years and amounts to a compound annual growth rate (CAGR) of 8.91%.

With a $10,000 investment in GOVT, the end total would have been $12,656. This equates to a $2,656 profit over 7 years and a compound annual growth rate (CAGR) of 2.67%.

VLUE’s CAGR is 6.24 percentage points higher than that of GOVT and as a result, would have yielded $4,591 more on a $10,000 investment. Thus, VLUE outperformed GOVT by 6.24% annually.


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