The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and IUSB is a iShares N/A fund. So, what’s the difference between VO and IUSB? And which fund is better?
The expense ratio of VO is 0.02 percentage points lower than IUSB’s (0.04% vs. 0.06%). VO also has a high exposure to the technology sector while IUSB is mostly comprised of AAA bonds. Overall, VO has provided higher returns than IUSB over the past ten years.
In this article, we’ll compare VO vs. IUSB. We’ll look at holdings and annual returns, as well as at their portfolio growth and risk metrics. Moreover, I’ll also discuss VO’s and IUSB’s performance, fund composition, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Mid-Cap Index Fund ETF Shares||iShares Core Total USD Bond Market ETF|
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 Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.
VO’s dividend yield is 0.87% lower than that of IUSB (1.23% vs. 2.1%). Also, VO yielded on average 10.21% more per year over the past decade (14.34% vs. 4.13%). The expense ratio of VO is 0.02 percentage points lower than IUSB’s (0.04% vs. 0.06%).
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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%.
|IUSB Bond Sectors||Weight|
IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.
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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Treynor Ratio of 11.32 with a Standard Deviation of 15.65 and a R-squared of 92.22. Its Mean Return is 1.14 while VO’s Beta is 1.11. Furthermore, the fund has a Sharpe Ratio of 0.83 and a Alpha of -2.71.
The iShares Core Total USD Bond Market ETF (IUSB) has a Treynor Ratio of 0 with a Alpha of 0 and a Beta of 0. Its Sharpe Ratio is 0 while IUSB’s Standard Deviation is 0. Furthermore, the fund has a R-squared of 0 and a Mean Return of 0.
VO’s Mean Return is 1.14 points higher than that of IUSB and its R-squared is 92.22 points higher. With a Standard Deviation of 15.65, VO is slightly more volatile than IUSB. The Alpha and Beta of VO are 2.71 points lower and 1.11 points higher than IUSB’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 2019 was the strongest year for IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.
VO’s CAGR is 10.21 percentage points higher than that of IUSB and as a result, would have yielded $5,701 more on a $10,000 investment. Thus, VO outperformed IUSB by 10.21% annually.
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