The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between VO and VBK? And which fund is better?
The expense ratio of VO is 0.03 percentage points lower than VBK’s (0.04% vs. 0.07%). VO also has a lower exposure to the technology sector and a lower standard deviation. Overall, VO has provided lower returns than VBK over the past ten years.
In this article, we’ll compare VO vs. VBK. We’ll look at risk metrics and performance, as well as at their industry exposure and fund composition. Moreover, I’ll also discuss VO’s and VBK’s holdings, annual returns, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Mid-Cap Index Fund ETF Shares||Vanguard Small-Cap Growth Index Fund ETF Shares|
|Category||Mid-Cap Blend||Small Growth|
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 Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.
VO’s dividend yield is 0.78% higher than that of VBK (1.23% vs. 0.45%). Also, VO yielded on average 2.19% less per year over the past decade (14.34% vs. 16.53%). The expense ratio of VO is 0.03 percentage points lower than VBK’s (0.04% vs. 0.07%).
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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 Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.
VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.
VO is 5.86% less exposed to the Technology sector than VBK (22.01% vs 27.87%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 10.21% lower and 0.01% lower respectively (13.03% vs. 23.24% and 12.12% vs. 12.13%). In total, Basic Materials, Energy, and Utilities also make up 7.72% more of the fund’s holdings compared to VBK (12.30% vs. 4.58%).
|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||0.78%|
|Fair Isaac Corp||0.57%|
|Bill.com Holdings Inc Ordinary Shares||0.56%|
VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.
Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.
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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a R-squared of 92.22 with a Beta of 1.11 and a Mean Return of 1.14. Its Treynor Ratio is 11.32 while VO’s Sharpe Ratio is 0.83. Furthermore, the fund has a Standard Deviation of 15.65 and a Alpha of -2.71.
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Treynor Ratio of 11.18 with a Standard Deviation of 17.95 and a Sharpe Ratio of 0.78. Its Alpha is -2.81 while VBK’s Mean Return is 1.22. Furthermore, the fund has a Beta of 1.18 and a R-squared of 80.56.
VO’s Mean Return is 0.08 points lower than that of VBK and its R-squared is 11.66 points higher. With a Standard Deviation of 15.65, VO is slightly less volatile than VBK. The Alpha and Beta of VO are 0.10 points higher and 0.07 points lower than VBK’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 VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% 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 VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.
VO’s CAGR is 2.19 percentage points lower than that of VBK and as a result, would have yielded $8,235 less on a $10,000 investment. Thus, VO performed worse than VBK by 2.19% annually.
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