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VOO vs. LQD: What’s The Difference?

The Vanguard S&P 500 ETF (VOO) and the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) are both among the Top 100 ETFs. VOO is a Vanguard Large Blend fund and LQD is a iShares Corporate Bond fund. So, what’s the difference between VOO and LQD? And which fund is better?

The expense ratio of VOO is 0.11 percentage points lower than LQD’s (0.03% vs. 0.14%). VOO also has a high exposure to the technology sector while LQD is mostly comprised of BBB bonds. Overall, VOO has provided higher returns than LQD over the past ten years.

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


NameVanguard S&P 500 ETFiShares iBoxx $ Investment Grade Corporate Bond ETF
CategoryLarge BlendCorporate Bond
Avg. Return14.45%6.58%
Div. Yield1.34%2.48%
Expense Ratio0.03%0.14%

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 iBoxx $ Investment Grade Corporate Bond ETF (LQD) is a Corporate Bond fund that is issued by iShares. It currently has 40.23B total assets under management and has yielded an average annual return of 6.58% over the past 10 years. The fund has a dividend yield of 2.48% with an expense ratio of 0.14%.

VOO’s dividend yield is 1.14% lower than that of LQD (1.34% vs. 2.48%). Also, VOO yielded on average 7.87% more per year over the past decade (14.45% vs. 6.58%). The expense ratio of VOO is 0.11 percentage points lower than LQD’s (0.03% vs. 0.14%).

Fund Composition


VOO - Holdings

VOO HoldingsWeight
Apple Inc5.92%
Microsoft Corp5.62% Inc4.06%
Facebook Inc Class A2.29%
Alphabet Inc Class A2.02%
Alphabet Inc Class C1.97%
Tesla Inc1.44%
Berkshire Hathaway Inc Class B1.44%
NVIDIA Corp1.37%
JPMorgan Chase & Co1.3%

VOO’s Top Holdings are Apple Inc, Microsoft Corp, 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%.

LQD - Holdings

LQD Bond SectorsWeight
Below B0.0%
US Government0.0%

LQD’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.92%, 37.97%, 8.49%, 2.7%, and 0.05%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.


Annual Returns

VOO vs. LQD - Annual Returns


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 LQD, returning 17.13% on an annual basis. The poorest year for LQD in the last ten years was 2018, with a yield of -3.76%. Most years the iShares iBoxx $ Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2017, 2014, and 2011, when gains were 7.16%, 8.57%, and 8.89% respectively.

Portfolio Growth

VOO vs. LQD - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR

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 LQD, the end total would have been $18,118. This equates to a $8,118 profit over 10 years and a compound annual growth rate (CAGR) of 6.58%.

VOO’s CAGR is 7.87 percentage points higher than that of LQD and as a result, would have yielded $18,457 more on a $10,000 investment. Thus, VOO outperformed LQD by 7.87% annually.

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