The Vanguard S&P 500 ETF (VOO) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. VOO is a Vanguard Large Blend fund and IUSB is a iShares N/A fund. So, what’s the difference between VOO and IUSB? And which fund is better?
The expense ratio of VOO is 0.03 percentage points lower than IUSB’s (0.03% vs. 0.06%). VOO also has a high exposure to the technology sector while IUSB is mostly comprised of AAA bonds. Overall, VOO has provided higher returns than IUSB over the past ten years.
In this article, we’ll compare VOO vs. IUSB. We’ll look at portfolio growth and fund composition, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss VOO’s and IUSB’s annual returns, performance, and holdings and examine how these affect their overall returns.
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|Name||Vanguard S&P 500 ETF||iShares Core Total USD Bond Market ETF|
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 iShares Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.
VOO’s dividend yield is 0.76% lower than that of IUSB (1.34% vs. 2.1%). Also, VOO yielded on average 10.32% more per year over the past decade (14.45% vs. 4.13%). The expense ratio of VOO is 0.03 percentage points lower than IUSB’s (0.03% vs. 0.06%).
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|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%.
|IUSB Bond Sectors||Weight|
IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) 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 2019 was the strongest year for IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VOO would have resulted in a final balance of $20,543. This is a profit of $10,543 over 6 years and amounts to a compound annual growth rate (CAGR) of 14.45%.
With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.
VOO’s CAGR is 10.32 percentage points higher than that of IUSB and as a result, would have yielded $7,839 more on a $10,000 investment. Thus, VOO outperformed IUSB by 10.32% annually.
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