The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between VO and BIV? And which fund is better?
The expense ratio of VO is 0.01 percentage points lower than BIV’s (0.04% vs. 0.05%). VO also has a high exposure to the technology sector while BIV is mostly comprised of AAA bonds. Overall, VO has provided higher returns than BIV over the past ten years.
In this article, we’ll compare VO vs. BIV. We’ll look at holdings and performance, as well as at their portfolio growth and risk metrics. Moreover, I’ll also discuss VO’s and BIV’s annual returns, fund composition, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Mid-Cap Index Fund ETF Shares||Vanguard Intermediate-Term Bond Index Fund ETF Shares|
|Category||Mid-Cap Blend||Intermediate-Term Bond|
The Vanguard Mid-Cap Index Fund ETF Shares (VO) is a Mid-Cap Blend fund that is issued by Vanguard. It currently has 154.08B total assets under management and has yielded an average annual return of 14.34% over the past 10 years. The fund has a dividend yield of 1.23% with an expense ratio of 0.04%.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.
VO’s dividend yield is 0.83% lower than that of BIV (1.23% vs. 2.06%). Also, VO yielded on average 9.02% more per year over the past decade (14.34% vs. 5.31%). The expense ratio of VO is 0.01 percentage points lower than BIV’s (0.04% vs. 0.05%).
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|IDEXX Laboratories Inc||0.78%|
|Marvell Technology Inc||0.68%|
|IQVIA Holdings Inc||0.68%|
|Chipotle Mexican Grill Inc||0.63%|
|Veeva Systems Inc Class A||0.62%|
|Digital Realty Trust Inc||0.62%|
|Carrier Global Corp Ordinary Shares||0.61%|
VO’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Marvell Technology Inc, IQVIA Holdings Inc, and Chipotle Mexican Grill Inc at 0.78%, 0.75%, 0.68%, 0.68%, and 0.63%.
Veeva Systems Inc Class A (0.62%), Digital Realty Trust Inc (0.62%), and Centene Corp (0.62%) have a slightly smaller but still significant weight. Aptiv PLC and Carrier Global Corp Ordinary Shares are also represented in the VO’s holdings at 0.62% and 0.61%.
|BIV Bond Sectors||Weight|
BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.
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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Standard Deviation of 15.65 with a Treynor Ratio of 11.32 and a Mean Return of 1.14. Its Sharpe Ratio is 0.83 while VO’s Alpha is -2.71. Furthermore, the fund has a R-squared of 92.22 and a Beta of 1.11.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a R-squared of 95.12 with a Beta of 1.33 and a Sharpe Ratio of 0.89. Its Mean Return is 0.35 while BIV’s Standard Deviation is 4.09. Furthermore, the fund has a Alpha of -0.07 and a Treynor Ratio of 2.72.
VO’s Mean Return is 0.79 points higher than that of BIV and its R-squared is 2.90 points lower. With a Standard Deviation of 15.65, VO is slightly more volatile than BIV. The Alpha and Beta of VO are 2.64 points lower and 0.22 points lower than BIV’s Alpha and Beta.
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VO had its best year in 2013 with an annual return of 35.15%. VO’s worst year over the past decade yielded -9.21% and occurred in 2018. In most years the Vanguard Mid-Cap Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2020 where annual returns amounted to 13.76%, 15.98%, and 18.22% respectively.
The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VO would have resulted in a final balance of $40,404. This is a profit of $30,404 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.34%.
With a $10,000 investment in BIV, the end total would have been $17,492. This equates to a $7,492 profit over 11 years and a compound annual growth rate (CAGR) of 5.31%.
VO’s CAGR is 9.02 percentage points higher than that of BIV and as a result, would have yielded $22,912 more on a $10,000 investment. Thus, VO outperformed BIV by 9.02% annually.
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