VO vs. DGRO: What’s The Difference?

The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the iShares Core Dividend Growth ETF (DGRO) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and DGRO is a iShares Large Value fund. So, what’s the difference between VO and DGRO? And which fund is better?

The expense ratio of VO is 0.04 percentage points lower than DGRO’s (0.04% vs. 0.08%). VO also has a higher exposure to the technology sector and a higher standard deviation. Overall, VO has provided higher returns than DGRO over the past ten years.

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

Summary

VO DGRO
Name Vanguard Mid-Cap Index Fund ETF Shares iShares Core Dividend Growth ETF
Category Mid-Cap Blend Large Value
Issuer Vanguard iShares
AUM 154.08B 20B
Avg. Return 14.34% 12.46%
Div. Yield 1.23% 2.04%
Expense Ratio 0.04% 0.08%

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 iShares Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.

VO’s dividend yield is 0.81% lower than that of DGRO (1.23% vs. 2.04%). Also, VO yielded on average 1.88% more per year over the past decade (14.34% vs. 12.46%). The expense ratio of VO is 0.04 percentage points lower than DGRO’s (0.04% vs. 0.08%).

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Fund Composition

Industry Exposure

VO vs. DGRO - Industry Exposure

VO DGRO
Technology 22.01% 18.98%
Industrials 11.92% 12.52%
Energy 3.82% 0.11%
Communication Services 5.61% 4.53%
Utilities 5.12% 7.34%
Healthcare 13.03% 17.55%
Consumer Defensive 3.25% 10.24%
Real Estate 8.67% 0.0%
Financial Services 11.08% 18.47%
Consumer Cyclical 12.12% 7.42%
Basic Materials 3.36% 2.83%

The Vanguard Mid-Cap Index Fund ETF Shares (VO) has the most exposure to the Technology sector at 22.01%. This is followed by Healthcare and Consumer Cyclical at 13.03% and 12.12% respectively. Basic Materials (3.36%), Energy (3.82%), and Utilities (5.12%) only make up 12.30% of the fund’s total assets.

VO’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Industrials, and Consumer Cyclical stocks at 5.61%, 8.67%, 11.08%, 11.92%, and 12.12%.

The iShares Core Dividend Growth ETF (DGRO) has the most exposure to the Technology sector at 18.98%. This is followed by Financial Services and Healthcare at 18.47% and 17.55% respectively. Energy (0.11%), Basic Materials (2.83%), and Communication Services (4.53%) only make up 7.47% of the fund’s total assets.

DGRO’s mid-section with moderate exposure is comprised of Utilities, Consumer Cyclical, Consumer Defensive, Industrials, and Healthcare stocks at 7.34%, 7.42%, 10.24%, 12.52%, and 17.55%.

VO is 3.03% more exposed to the Technology sector than DGRO (22.01% vs 18.98%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 4.52% lower and 4.70% higher respectively (13.03% vs. 17.55% and 12.12% vs. 7.42%). In total, Basic Materials, Energy, and Utilities also make up 2.02% more of the fund’s holdings compared to DGRO (12.30% vs. 10.28%).

Holdings

VO - Holdings

VO Holdings Weight
IDEXX Laboratories Inc 0.78%
DocuSign Inc 0.75%
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%
Centene Corp 0.62%
Aptiv PLC 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%.

DGRO - Holdings

DGRO Holdings Weight
Microsoft Corp 3.29%
Apple Inc 3.26%
Pfizer Inc 2.89%
Johnson & Johnson 2.87%
Procter & Gamble Co 2.79%
Verizon Communications Inc 2.68%
JPMorgan Chase & Co 2.57%
The Home Depot Inc 2.35%
Merck & Co Inc 2.11%
Cisco Systems Inc 1.98%

DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.

Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.

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Risk Analysis

VO DGRO
Mean Return 1.14 0
R-squared 92.22 0
Std. Deviation 15.65 0
Alpha -2.71 0
Beta 1.11 0
Sharpe Ratio 0.83 0
Treynor Ratio 11.32 0

The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Mean Return of 1.14 with a Standard Deviation of 15.65 and a R-squared of 92.22. Its Sharpe Ratio is 0.83 while VO’s Alpha is -2.71. Furthermore, the fund has a Beta of 1.11 and a Treynor Ratio of 11.32.

The iShares Core Dividend Growth ETF (DGRO) has a Mean Return of 0 with a R-squared of 0 and a Treynor Ratio of 0. Its Standard Deviation is 0 while DGRO’s Alpha is 0. Furthermore, the fund has a Beta of 0 and a Sharpe Ratio of 0.

VO’s Mean Return is 1.14 points higher than that of DGRO and its R-squared is 92.22 points higher. With a Standard Deviation of 15.65, VO is slightly more volatile than DGRO. The Alpha and Beta of VO are 2.71 points lower and 1.11 points higher than DGRO’s Alpha and Beta.

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Performance

Annual Returns

VO vs. DGRO - Annual Returns

Year VO DGRO
2020 18.22% 9.47%
2019 31.04% 30.02%
2018 -9.21% -2.24%
2017 19.25% 22.84%
2016 11.23% 15.27%
2015 -1.34% -0.62%
2014 13.76% 0.0%
2013 35.15% 0.0%
2012 15.98% 0.0%
2011 -1.96% 0.0%
2010 25.57% 0.0%

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 2019 was the strongest year for DGRO, returning 30.02% on an annual basis. The poorest year for DGRO in the last ten years was 2018, with a yield of -2.24%. Most years the iShares Core Dividend Growth ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

VO vs. DGRO - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VO $10,000 $18,405 14.34%
DGRO $10,000 $19,580 12.46%

A $10,000 investment in VO would have resulted in a final balance of $18,405. This is a profit of $8,405 over 6 years and amounts to a compound annual growth rate (CAGR) of 14.34%.

With a $10,000 investment in DGRO, the end total would have been $19,580. This equates to a $9,580 profit over 6 years and a compound annual growth rate (CAGR) of 12.46%.

VO’s CAGR is 1.88 percentage points higher than that of DGRO and as a result, would have yielded $1,175 less on a $10,000 investment. Thus, VO outperformed DGRO by 1.88% annually.


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