The Vanguard S&P 500 ETF (VOO) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. VOO is a Vanguard Large Blend fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between VOO and BIV? And which fund is better?
The expense ratio of VOO is 0.02 percentage points lower than BIV’s (0.03% vs. 0.05%). VOO also has a high exposure to the technology sector while BIV is mostly comprised of AAA bonds. Overall, VOO has provided higher returns than BIV over the past ten years.
In this article, we’ll compare VOO vs. BIV. We’ll look at holdings and fund composition, as well as at their annual returns and portfolio growth. Moreover, I’ll also discuss VOO’s and BIV’s industry exposure, performance, and risk metrics and examine how these affect their overall returns.
|Name||Vanguard S&P 500 ETF||Vanguard Intermediate-Term Bond Index Fund ETF Shares|
|Category||Large Blend||Intermediate-Term Bond|
The Vanguard S&P 500 ETF (VOO) is a Large Blend fund that is issued by Vanguard. It currently has 753.41B total assets under management and has yielded an average annual return of 14.45% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.03%.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.
VOO’s dividend yield is 0.72% lower than that of BIV (1.34% vs. 2.06%). Also, VOO yielded on average 9.13% more per year over the past decade (14.45% vs. 5.31%). The expense ratio of VOO is 0.02 percentage points lower than BIV’s (0.03% vs. 0.05%).
|Facebook Inc Class A||2.29%|
|Alphabet Inc Class A||2.02%|
|Alphabet Inc Class C||1.97%|
|Berkshire Hathaway Inc Class B||1.44%|
|JPMorgan Chase & Co||1.3%|
VOO’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.92%, 5.62%, 4.06%, 2.29%, and 2.02%.
Alphabet Inc Class C (1.97%), Tesla Inc (1.44%), and Berkshire Hathaway Inc Class B (1.44%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VOO’s holdings at 1.37% and 1.3%.
|BIV Bond Sectors||Weight|
BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.
VOO had its best year in 2013 with an annual return of 32.33%. VOO’s worst year over the past decade yielded -4.42% and occurred in 2018. In most years the Vanguard S&P 500 ETF provided moderate returns such as in 2016, 2014, and 2012 where annual returns amounted to 11.93%, 13.63%, and 15.98% respectively.
The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VOO would have resulted in a final balance of $36,575. This is a profit of $26,575 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.45%.
With a $10,000 investment in BIV, the end total would have been $15,967. This equates to a $5,967 profit over 10 years and a compound annual growth rate (CAGR) of 5.31%.
VOO’s CAGR is 9.13 percentage points higher than that of BIV and as a result, would have yielded $20,608 more on a $10,000 investment. Thus, VOO outperformed BIV by 9.13% annually.
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