The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the Vanguard Small-Cap Value Index Fund ETF Shares (VBR) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and VBR is a Vanguard Small Value fund. So, what’s the difference between VO and VBR? And which fund is better?
The expense ratio of VO is 0.03 percentage points lower than VBR’s (0.04% vs. 0.07%). VO also has a higher exposure to the technology sector and a lower standard deviation. Overall, VO has provided higher returns than VBR over the past ten years.
In this article, we’ll compare VO vs. VBR. We’ll look at performance and holdings, as well as at their portfolio growth and industry exposure. Moreover, I’ll also discuss VO’s and VBR’s risk metrics, fund composition, and annual returns and examine how these affect their overall returns.
|Name||Vanguard Mid-Cap Index Fund ETF Shares||Vanguard Small-Cap Value Index Fund ETF Shares|
|Category||Mid-Cap Blend||Small Value|
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 Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.
VO’s dividend yield is 0.37% lower than that of VBR (1.23% vs. 1.6%). Also, VO yielded on average 2.05% more per year over the past decade (14.34% vs. 12.28%). The expense ratio of VO is 0.03 percentage points lower than VBR’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 Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.
VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.
VO is 13.62% more exposed to the Technology sector than VBR (22.01% vs 8.39%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 5.87% higher and 1.70% lower respectively (13.03% vs. 7.16% and 12.12% vs. 13.82%). In total, Basic Materials, Energy, and Utilities also make up 2.81% less of the fund’s holdings compared to VBR (12.30% vs. 15.11%).
|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%.
|Diamondback Energy Inc||0.55%|
|VICI Properties Inc Ordinary Shares||0.54%|
|Nuance Communications Inc||0.5%|
|Molina Healthcare Inc||0.48%|
|Howmet Aerospace Inc||0.44%|
|Apollo Global Management Inc Class A||0.42%|
|Brown & Brown Inc||0.41%|
VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.
Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.
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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a R-squared of 92.22 with a Sharpe Ratio of 0.83 and a Beta of 1.11. Its Treynor Ratio is 11.32 while VO’s Mean Return is 1.14. Furthermore, the fund has a Alpha of -2.71 and a Standard Deviation of 15.65.
The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Mean Return of 1.08 with a Treynor Ratio of 9.15 and a Standard Deviation of 18.37. Its R-squared is 82.2 while VBR’s Beta is 1.23. Furthermore, the fund has a Sharpe Ratio of 0.67 and a Alpha of -5.09.
VO’s Mean Return is 0.06 points higher than that of VBR and its R-squared is 10.02 points higher. With a Standard Deviation of 15.65, VO is slightly less volatile than VBR. The Alpha and Beta of VO are 2.38 points higher and 0.12 points lower than VBR’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 VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% 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 VBR, the end total would have been $32,611. This equates to a $22,611 profit over 11 years and a compound annual growth rate (CAGR) of 12.28%.
VO’s CAGR is 2.05 percentage points higher than that of VBR and as a result, would have yielded $7,793 more on a $10,000 investment. Thus, VO outperformed VBR by 2.05% annually.
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