The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the iShares MBS ETF (MBB) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and MBB is a iShares Intermediate Government fund. So, what’s the difference between VO and MBB? And which fund is better?
The expense ratio of VO is 0.02 percentage points lower than MBB’s (0.04% vs. 0.06%). VO also has a high exposure to the technology sector while MBB is mostly comprised of AAA bonds. Overall, VO has provided higher returns than MBB over the past ten years.
In this article, we’ll compare VO vs. MBB. We’ll look at holdings and risk metrics, as well as at their annual returns and portfolio growth. Moreover, I’ll also discuss VO’s and MBB’s fund composition, performance, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Mid-Cap Index Fund ETF Shares||iShares MBS ETF|
|Category||Mid-Cap Blend||Intermediate Government|
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 MBS ETF (MBB) is a Intermediate Government fund that is issued by iShares. It currently has 25.69B total assets under management and has yielded an average annual return of 3.08% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.06%.
VO’s dividend yield is 0.65% lower than that of MBB (1.23% vs. 1.88%). Also, VO yielded on average 11.26% more per year over the past decade (14.34% vs. 3.08%). The expense ratio of VO is 0.02 percentage points lower than MBB’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%.
|MBB Bond Sectors||Weight|
MBB’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.51%, 0.49%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Sharpe Ratio of 0.83 with a Standard Deviation of 15.65 and a Alpha of -2.71. Its Beta is 1.11 while VO’s R-squared is 92.22. Furthermore, the fund has a Treynor Ratio of 11.32 and a Mean Return of 1.14.
The iShares MBS ETF (MBB) has a Treynor Ratio of 3.02 with a Alpha of 0.14 and a Sharpe Ratio of 0.87. Its Mean Return is 0.2 while MBB’s R-squared is 74.38. Furthermore, the fund has a Standard Deviation of 2.12 and a Beta of 0.6.
VO’s Mean Return is 0.94 points higher than that of MBB and its R-squared is 17.84 points higher. With a Standard Deviation of 15.65, VO is slightly more volatile than MBB. The Alpha and Beta of VO are 2.85 points lower and 0.51 points higher than MBB’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 MBB, returning 6.27% on an annual basis. The poorest year for MBB in the last ten years was 2013, with a yield of -1.92%. Most years the iShares MBS ETF has given investors modest returns, such as in 2012, 2017, and 2020, when gains were 2.23%, 2.37%, and 4.03% 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 MBB, the end total would have been $13,906. This equates to a $3,906 profit over 11 years and a compound annual growth rate (CAGR) of 3.08%.
VO’s CAGR is 11.26 percentage points higher than that of MBB and as a result, would have yielded $26,498 more on a $10,000 investment. Thus, VO outperformed MBB by 11.26% annually.
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