VO vs. VLUE: What’s The Difference?

The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the iShares MSCI USA Value Factor ETF (VLUE) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and VLUE is a iShares Large Value fund. So, what’s the difference between VO and VLUE? And which fund is better?

The expense ratio of VO is 0.11 percentage points lower than VLUE’s (0.04% vs. 0.15%). VO also has a lower exposure to the technology sector and a higher standard deviation. Overall, VO has provided higher returns than VLUE over the past ten years.

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

Summary

VO VLUE
Name Vanguard Mid-Cap Index Fund ETF Shares iShares MSCI USA Value Factor ETF
Category Mid-Cap Blend Large Value
Issuer Vanguard iShares
AUM 154.08B 15.95B
Avg. Return 14.34% 8.91%
Div. Yield 1.23% 1.89%
Expense Ratio 0.04% 0.15%

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 MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.

VO’s dividend yield is 0.66% lower than that of VLUE (1.23% vs. 1.89%). Also, VO yielded on average 5.43% more per year over the past decade (14.34% vs. 8.91%). The expense ratio of VO is 0.11 percentage points lower than VLUE’s (0.04% vs. 0.15%).

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Fund Composition

Industry Exposure

VO vs. VLUE - Industry Exposure

VO VLUE
Technology 22.01% 26.89%
Industrials 11.92% 9.14%
Energy 3.82% 2.42%
Communication Services 5.61% 10.39%
Utilities 5.12% 2.68%
Healthcare 13.03% 14.31%
Consumer Defensive 3.25% 7.22%
Real Estate 8.67% 3.19%
Financial Services 11.08% 10.96%
Consumer Cyclical 12.12% 10.66%
Basic Materials 3.36% 2.14%

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 MSCI USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.

VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.

VO is 4.88% less exposed to the Technology sector than VLUE (22.01% vs 26.89%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 1.28% lower and 1.46% higher respectively (13.03% vs. 14.31% and 12.12% vs. 10.66%). In total, Basic Materials, Energy, and Utilities also make up 5.06% more of the fund’s holdings compared to VLUE (12.30% vs. 7.24%).

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%.

VLUE - Holdings

VLUE Holdings Weight
AT&T Inc 7.13%
Intel Corp 6.14%
General Motors Co 3.19%
Micron Technology Inc 3.14%
Cisco Systems Inc 3.05%
International Business Machines Corp 2.76%
Target Corp 2.38%
Citigroup Inc 2.32%
Ford Motor Co 2.23%
Pfizer Inc 2.17%

VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.

International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.

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Risk Analysis

VO VLUE
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 Alpha of -2.71 with a R-squared of 92.22 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 Sharpe Ratio of 0.83 and a Standard Deviation of 15.65.

The iShares MSCI USA Value Factor ETF (VLUE) has a R-squared of 0 with a Treynor Ratio of 0 and a Sharpe Ratio of 0. Its Beta is 0 while VLUE’s Mean Return is 0. Furthermore, the fund has a Alpha of 0 and a Standard Deviation of 0.

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

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Performance

Annual Returns

VO vs. VLUE - Annual Returns

Year VO VLUE
2020 18.22% -0.32%
2019 31.04% 27.47%
2018 -9.21% -11.18%
2017 19.25% 21.97%
2016 11.23% 15.68%
2015 -1.34% -3.54%
2014 13.76% 12.29%
2013 35.15% 0.0%
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 2019 was the strongest year for VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

VO vs. VLUE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VO $10,000 $20,938 14.34%
VLUE $10,000 $17,247 8.91%

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 VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.

VO’s CAGR is 5.43 percentage points higher than that of VLUE and as a result, would have yielded $3,691 more on a $10,000 investment. Thus, VO outperformed VLUE by 5.43% annually.


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