VO vs. IXUS: What’s The Difference?

The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the iShares Core MSCI Total International Stock ETF (IXUS) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and IXUS is a iShares Foreign Large Blend fund. So, what’s the difference between VO and IXUS? And which fund is better?

The expense ratio of VO is 0.05 percentage points lower than IXUS’s (0.04% vs. 0.09%). VO also has a higher exposure to the technology sector and a higher standard deviation. Overall, VO has provided higher returns than IXUS over the past ten years.

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

Summary

VO IXUS
Name Vanguard Mid-Cap Index Fund ETF Shares iShares Core MSCI Total International Stock ETF
Category Mid-Cap Blend Foreign Large Blend
Issuer Vanguard iShares
AUM 154.08B 29.54B
Avg. Return 14.34% 6.09%
Div. Yield 1.23% 2.13%
Expense Ratio 0.04% 0.09%

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 MSCI Total International Stock ETF (IXUS) is a Foreign Large Blend fund that is issued by iShares. It currently has 29.54B total assets under management and has yielded an average annual return of 6.09% over the past 10 years. The fund has a dividend yield of 2.13% with an expense ratio of 0.09%.

VO’s dividend yield is 0.90% lower than that of IXUS (1.23% vs. 2.13%). Also, VO yielded on average 8.25% more per year over the past decade (14.34% vs. 6.09%). The expense ratio of VO is 0.05 percentage points lower than IXUS’s (0.04% vs. 0.09%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

VO vs. IXUS - Industry Exposure

VO IXUS
Technology 22.01% 13.24%
Industrials 11.92% 12.78%
Energy 3.82% 4.39%
Communication Services 5.61% 7.09%
Utilities 5.12% 2.95%
Healthcare 13.03% 9.29%
Consumer Defensive 3.25% 8.19%
Real Estate 8.67% 3.66%
Financial Services 11.08% 17.34%
Consumer Cyclical 12.12% 12.57%
Basic Materials 3.36% 8.5%

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 MSCI Total International Stock ETF (IXUS) has the most exposure to the Financial Services sector at 17.34%. This is followed by Technology and Industrials at 13.24% and 12.78% respectively. Real Estate (3.66%), Energy (4.39%), and Communication Services (7.09%) only make up 15.14% of the fund’s total assets.

IXUS’s mid-section with moderate exposure is comprised of Consumer Defensive, Basic Materials, Healthcare, Consumer Cyclical, and Industrials stocks at 8.19%, 8.5%, 9.29%, 12.57%, and 12.78%.

VO is 8.77% more exposed to the Technology sector than IXUS (22.01% vs 13.24%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 3.74% higher and 0.45% lower respectively (13.03% vs. 9.29% and 12.12% vs. 12.57%). In total, Basic Materials, Energy, and Utilities also make up 3.54% less of the fund’s holdings compared to IXUS (12.30% vs. 15.84%).

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%.

IXUS - Holdings

IXUS Holdings Weight
Taiwan Semiconductor Manufacturing Co Ltd 1.64%
Tencent Holdings Ltd 1.35%
Alibaba Group Holding Ltd Ordinary Shares 1.34%
Nestle SA 1.1%
Samsung Electronics Co Ltd 1.06%
ASML Holding NV 0.9%
Roche Holding AG 0.81%
LVMH Moet Hennessy Louis Vuitton SE 0.67%
Novartis AG 0.62%
Toyota Motor Corp 0.59%

IXUS’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, and Samsung Electronics Co Ltd at 1.64%, 1.35%, 1.34%, 1.1%, and 1.06%.

ASML Holding NV (0.9%), Roche Holding AG (0.81%), and LVMH Moet Hennessy Louis Vuitton SE (0.67%) have a slightly smaller but still significant weight. Novartis AG and Toyota Motor Corp are also represented in the IXUS’s holdings at 0.62% and 0.59%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

VO IXUS
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 Treynor Ratio of 11.32 with a Mean Return of 1.14 and a Standard Deviation of 15.65. Its Alpha is -2.71 while VO’s Beta is 1.11. Furthermore, the fund has a R-squared of 92.22 and a Sharpe Ratio of 0.83.

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

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

BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Gemini - the simplest and cheapest broker I've found! Click here to read more (link to Gemini).

Performance

Annual Returns

VO vs. IXUS - Annual Returns

Year VO IXUS
2020 18.22% 11.14%
2019 31.04% 21.85%
2018 -9.21% -14.55%
2017 19.25% 28.08%
2016 11.23% 4.66%
2015 -1.34% -4.62%
2014 13.76% -3.96%
2013 35.15% 15.85%
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 2017 was the strongest year for IXUS, returning 28.08% on an annual basis. The poorest year for IXUS in the last ten years was 2018, with a yield of -14.55%. Most years the iShares Core MSCI Total International Stock ETF has given investors modest returns, such as in 2011, 2010, and 2016, when gains were 0.0%, 0.0%, and 4.66% respectively.

Portfolio Growth

VO vs. IXUS - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VO $10,000 $20,938 14.34%
IXUS $10,000 $14,209 6.09%

A $10,000 investment in VO would have resulted in a final balance of $20,938. This is a profit of $10,938 over 7 years and amounts to a compound annual growth rate (CAGR) of 14.34%.

With a $10,000 investment in IXUS, the end total would have been $14,209. This equates to a $4,209 profit over 7 years and a compound annual growth rate (CAGR) of 6.09%.

VO’s CAGR is 8.25 percentage points higher than that of IXUS and as a result, would have yielded $6,729 more on a $10,000 investment. Thus, VO outperformed IXUS by 8.25% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply