The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the Vanguard Small-Cap Index Fund ETF Shares (VB) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and VB is a Vanguard Small Blend fund. So, what’s the difference between VO and VB? And which fund is better?
The expense ratio of VO is 0.01 percentage points lower than VB’s (0.04% vs. 0.05%). VO also has a higher exposure to the technology sector and a lower standard deviation. Overall, VO has provided higher returns than VB over the past ten years.
In this article, we’ll compare VO vs. VB. We’ll look at portfolio growth and risk metrics, as well as at their performance and fund composition. Moreover, I’ll also discuss VO’s and VB’s industry exposure, annual returns, and holdings and examine how these affect their overall returns.
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|Name||Vanguard Mid-Cap Index Fund ETF Shares||Vanguard Small-Cap Index Fund ETF Shares|
|Category||Mid-Cap Blend||Small Blend|
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 Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.05%.
VO’s dividend yield is 0.09% higher than that of VB (1.23% vs. 1.14%). Also, VO yielded on average 0.08% more per year over the past decade (14.34% vs. 14.25%). The expense ratio of VO is 0.01 percentage points lower than VB’s (0.04% vs. 0.05%).
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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 Vanguard Small-Cap Index Fund ETF Shares (VB) has the most exposure to the Technology sector at 16.85%. This is followed by Industrials and Healthcare at 16.11% and 14.34% respectively. Communication Services (2.4%), Energy (3.67%), and Consumer Defensive (4.14%) only make up 10.21% of the fund’s total assets.
VB’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Healthcare stocks at 4.63%, 9.56%, 13.03%, 13.06%, and 14.34%.
VO is 5.16% more exposed to the Technology sector than VB (22.01% vs 16.85%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 1.31% lower and 0.91% lower respectively (13.03% vs. 14.34% and 12.12% vs. 13.03%). In total, Basic Materials, Energy, and Utilities also make up 1.81% more of the fund’s holdings compared to VB (12.30% vs. 10.49%).
|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%.
|Charles River Laboratories International Inc||0.34%|
|Diamondback Energy Inc||0.31%|
|VICI Properties Inc Ordinary Shares||0.3%|
VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.
Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.
The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Mean Return of 1.14 with a Sharpe Ratio of 0.83 and a Alpha of -2.71. Its R-squared is 92.22 while VO’s Standard Deviation is 15.65. Furthermore, the fund has a Beta of 1.11 and a Treynor Ratio of 11.32.
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a R-squared of 85.03 with a Beta of 1.21 and a Treynor Ratio of 10.15. Its Alpha is -4.02 while VB’s Mean Return is 1.15. Furthermore, the fund has a Sharpe Ratio of 0.74 and a Standard Deviation of 17.82.
VO’s Mean Return is 0.01 points lower than that of VB and its R-squared is 7.19 points higher. With a Standard Deviation of 15.65, VO is slightly less volatile than VB. The Alpha and Beta of VO are 1.31 points higher and 0.10 points lower than VB’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 2013 was the strongest year for VB, returning 37.8% on an annual basis. The poorest year for VB in the last ten years was 2018, with a yield of -9.3%. Most years the Vanguard Small-Cap Index Fund ETF Shares has given investors modest returns, such as in 2017, 2012, and 2016, when gains were 16.24%, 18.22%, and 18.31% 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 VB, the end total would have been $39,734. This equates to a $29,734 profit over 11 years and a compound annual growth rate (CAGR) of 14.25%.
VO’s CAGR is 0.08 percentage points higher than that of VB and as a result, would have yielded $670 more on a $10,000 investment. Thus, VO outperformed VB by 0.08% annually.
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