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VNQ vs. DIA: What’s The Difference?

The Vanguard Real Estate Index Fund ETF Shares (VNQ) and the SPDR Dow Jones Industrial Average ETF Trust (DIA) are both among the Top 100 ETFs. VNQ is a Vanguard Real Estate fund and DIA is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between VNQ and DIA? And which fund is better?

The expense ratio of VNQ is 0.04 percentage points lower than DIA’s (0.12% vs. 0.16%). VNQ also has a higher exposure to the real estate sector and a higher standard deviation. Overall, VNQ has provided lower returns than DIA over the past ten years.

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

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Summary

VNQDIA
NameVanguard Real Estate Index Fund ETF SharesSPDR Dow Jones Industrial Average ETF Trust
CategoryReal EstateLarge Value
IssuerVanguardSPDR State Street Global Advisors
AUM77.34B30.46B
Avg. Return11.05%13.35%
Div. Yield2.34%1.61%
Expense Ratio0.12%0.16%

The Vanguard Real Estate Index Fund ETF Shares (VNQ) is a Real Estate fund that is issued by Vanguard. It currently has 77.34B total assets under management and has yielded an average annual return of 11.05% over the past 10 years. The fund has a dividend yield of 2.34% with an expense ratio of 0.12%.

The SPDR Dow Jones Industrial Average ETF Trust (DIA) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 30.46B 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 1.61% with an expense ratio of 0.16%.

VNQ’s dividend yield is 0.73% higher than that of DIA (2.34% vs. 1.61%). Also, VNQ yielded on average 2.30% less per year over the past decade (11.05% vs. 13.35%). The expense ratio of VNQ is 0.04 percentage points lower than DIA’s (0.12% vs. 0.16%).

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Fund Composition

Industry Exposure

VNQ vs. DIA - Industry Exposure

VNQDIA
Technology0.0%17.32%
Industrials0.0%16.7%
Energy0.0%2.0%
Communication Services0.0%4.42%
Utilities0.0%0.0%
Healthcare0.0%17.92%
Consumer Defensive0.0%6.3%
Real Estate100.0%0.0%
Financial Services0.0%20.68%
Consumer Cyclical0.0%13.44%
Basic Materials0.0%1.21%

The Vanguard Real Estate Index Fund ETF Shares (VNQ) has the most exposure to the Real Estate sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.

VNQ’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.

The SPDR Dow Jones Industrial Average ETF Trust (DIA) has the most exposure to the Financial Services sector at 20.68%. This is followed by Healthcare and Technology at 17.92% and 17.32% respectively. Utilities (0.0%), Basic Materials (1.21%), and Energy (2.0%) only make up 3.21% of the fund’s total assets.

DIA’s mid-section with moderate exposure is comprised of Communication Services, Consumer Defensive, Consumer Cyclical, Industrials, and Technology stocks at 4.42%, 6.3%, 13.44%, 16.7%, and 17.32%.

VNQ is 100.00% more exposed to the Real Estate sector than DIA (100.0% vs 0.0%). VNQ’s exposure to Technology and Industrials stocks is 17.32% lower and 16.70% lower respectively (0.0% vs. 17.32% and 0.0% vs. 16.7%). In total, Consumer Cyclical, Financial Services, and Consumer Defensive also make up 40.42% less of the fund’s holdings compared to DIA (0.00% vs. 40.42%).

Holdings

VNQ - Holdings

VNQ HoldingsWeight
Vanguard Real Estate II Index11.62%
American Tower Corp7.24%
Prologis Inc5.33%
Crown Castle International Corp5.01%
Equinix Inc4.3%
Public Storage2.85%
Simon Property Group Inc2.52%
Digital Realty Trust Inc2.49%
SBA Communications Corp2.1%
Welltower Inc2.09%

VNQ’s Top Holdings are Vanguard Real Estate II Index, American Tower Corp, Prologis Inc, Crown Castle International Corp, and Equinix Inc at 11.62%, 7.24%, 5.33%, 5.01%, and 4.3%.

Public Storage (2.85%), Simon Property Group Inc (2.52%), and Digital Realty Trust Inc (2.49%) have a slightly smaller but still significant weight. SBA Communications Corp and Welltower Inc are also represented in the VNQ’s holdings at 2.1% and 2.09%.

DIA - Holdings

DIA HoldingsWeight
UnitedHealth Group Inc7.63%
Goldman Sachs Group Inc7.23%
The Home Depot Inc6.07%
Microsoft Corp5.16%
Salesforce.com Inc4.65%
Amgen Inc4.64%
Boeing Co4.56%
Visa Inc Class A4.45%
McDonald’s Corp4.4%
Honeywell International Inc4.18%

DIA’s Top Holdings are UnitedHealth Group Inc, Goldman Sachs Group Inc, The Home Depot Inc, Microsoft Corp, and Salesforce.com Inc at 7.63%, 7.23%, 6.07%, 5.16%, and 4.65%.

Amgen Inc (4.64%), Boeing Co (4.56%), and Visa Inc Class A (4.45%) have a slightly smaller but still significant weight. McDonald’s Corp and Honeywell International Inc are also represented in the DIA’s holdings at 4.4% and 4.18%.

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Risk Analysis

VNQDIA
Mean Return0.891.13
R-squared44.493.31
Std. Deviation16.1313.68
Alpha2.47-0.94
Beta0.760.97
Sharpe Ratio0.620.94
Treynor Ratio11.913.07

The Vanguard Real Estate Index Fund ETF Shares (VNQ) has a R-squared of 44.4 with a Sharpe Ratio of 0.62 and a Treynor Ratio of 11.9. Its Alpha is 2.47 while VNQ’s Mean Return is 0.89. Furthermore, the fund has a Beta of 0.76 and a Standard Deviation of 16.13.

The SPDR Dow Jones Industrial Average ETF Trust (DIA) has a R-squared of 93.31 with a Sharpe Ratio of 0.94 and a Treynor Ratio of 13.07. Its Standard Deviation is 13.68 while DIA’s Mean Return is 1.13. Furthermore, the fund has a Beta of 0.97 and a Alpha of -0.94.

VNQ’s Mean Return is 0.24 points lower than that of DIA and its R-squared is 48.91 points lower. With a Standard Deviation of 16.13, VNQ is slightly more volatile than DIA. The Alpha and Beta of VNQ are 3.41 points higher and 0.21 points lower than DIA’s Alpha and Beta.

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Performance

Annual Returns

VNQ vs. DIA - Annual Returns

YearVNQDIA
2020-4.72%9.63%
201928.91%25.09%
2018-5.95%-3.6%
20174.95%27.97%
20168.53%16.28%
20152.37%0.1%
201430.29%9.88%
20132.42%29.41%
201217.67%10.04%
20118.62%8.21%
201028.44%13.87%

VNQ had its best year in 2014 with an annual return of 30.29%. VNQ’s worst year over the past decade yielded -5.95% and occurred in 2018. In most years the Vanguard Real Estate Index Fund ETF Shares provided moderate returns such as in 2017, 2016, and 2011 where annual returns amounted to 4.95%, 8.53%, and 8.62% respectively.

The year 2013 was the strongest year for DIA, returning 29.41% on an annual basis. The poorest year for DIA in the last ten years was 2018, with a yield of -3.6%. Most years the SPDR Dow Jones Industrial Average ETF Trust has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 9.88%, 10.04%, and 13.87% respectively.

Portfolio Growth

VNQ vs. DIA - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VNQ$10,000$29,50611.05%
DIA$10,000$37,96513.35%

A $10,000 investment in VNQ would have resulted in a final balance of $29,506. This is a profit of $19,506 over 11 years and amounts to a compound annual growth rate (CAGR) of 11.05%.

With a $10,000 investment in DIA, the end total would have been $37,965. This equates to a $27,965 profit over 11 years and a compound annual growth rate (CAGR) of 13.35%.

VNQ’s CAGR is 2.30 percentage points lower than that of DIA and as a result, would have yielded $8,459 less on a $10,000 investment. Thus, VNQ performed worse than DIA by 2.30% annually.


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