VOO vs. PFF: What’s The Difference?

The Vanguard S&P 500 ETF (VOO) and the iShares Preferred and Income Securities ETF (PFF) are both among the Top 100 ETFs. VOO is a Vanguard Large Blend fund and PFF is a iShares Preferred Stock fund. So, what’s the difference between VOO and PFF? And which fund is better?

The expense ratio of VOO is 0.43 percentage points lower than PFF’s (0.03% vs. 0.46%). VOO also has a higher exposure to the technology sector and a higher standard deviation. Overall, VOO has provided higher returns than PFF over the past ten years.

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

Summary

VOO PFF
Name Vanguard S&P 500 ETF iShares Preferred and Income Securities ETF
Category Large Blend Preferred Stock
Issuer Vanguard iShares
AUM 753.41B 19.8B
Avg. Return 14.45% 6.90%
Div. Yield 1.34% 4.47%
Expense Ratio 0.03% 0.46%

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 Preferred and Income Securities ETF (PFF) is a Preferred Stock fund that is issued by iShares. It currently has 19.8B total assets under management and has yielded an average annual return of 6.90% over the past 10 years. The fund has a dividend yield of 4.47% with an expense ratio of 0.46%.

VOO’s dividend yield is 3.13% lower than that of PFF (1.34% vs. 4.47%). Also, VOO yielded on average 7.55% more per year over the past decade (14.45% vs. 6.90%). The expense ratio of VOO is 0.43 percentage points lower than PFF’s (0.03% vs. 0.46%).

Fund Composition

Industry Exposure

VOO vs. PFF - Industry Exposure

VOO PFF
Technology 24.24% 0.0%
Industrials 8.86% 10.27%
Energy 2.84% 0.0%
Communication Services 11.14% 0.0%
Utilities 2.43% 81.81%
Healthcare 13.1% 3.54%
Consumer Defensive 6.32% 0.0%
Real Estate 2.58% 0.65%
Financial Services 14.2% 0.0%
Consumer Cyclical 12.01% 0.0%
Basic Materials 2.27% 3.74%

The Vanguard S&P 500 ETF (VOO) has the most exposure to the Technology sector at 24.24%. This is followed by Financial Services and Healthcare at 14.2% and 13.1% respectively. Utilities (2.43%), Real Estate (2.58%), and Energy (2.84%) only make up 7.85% of the fund’s total assets.

VOO’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 6.32%, 8.86%, 11.14%, 12.01%, and 13.1%.

The iShares Preferred and Income Securities ETF (PFF) has the most exposure to the Utilities sector at 81.81%. This is followed by Industrials and Basic Materials at 10.27% and 3.74% respectively. Financial Services (0.0%), Consumer Defensive (0.0%), and Communication Services (0.0%) only make up 0.00% of the fund’s total assets.

PFF’s mid-section with moderate exposure is comprised of Energy, Technology, Real Estate, Healthcare, and Basic Materials stocks at 0.0%, 0.0%, 0.65%, 3.54%, and 3.74%.

VOO is 24.24% more exposed to the Technology sector than PFF (24.24% vs 0.0%). VOO’s exposure to Financial Services and Healthcare stocks is 14.20% higher and 9.56% higher respectively (14.2% vs. 0.0% and 13.1% vs. 3.54%). In total, Utilities, Real Estate, and Energy also make up 74.61% less of the fund’s holdings compared to PFF (7.85% vs. 82.46%).

Holdings

VOO - Holdings

VOO Holdings Weight
Apple Inc 5.92%
Microsoft Corp 5.62%
Amazon.com Inc 4.06%
Facebook Inc Class A 2.29%
Alphabet Inc Class A 2.02%
Alphabet Inc Class C 1.97%
Tesla Inc 1.44%
Berkshire Hathaway Inc Class B 1.44%
NVIDIA Corp 1.37%
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%.

PFF - Holdings

PFF Holdings Weight
Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A 2.54%
BlackRock Cash Funds Treasury SL Agency 2.3%
Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L- 1.79%
Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L- 1.49%
ArcelorMittal S.A. 5.5% 1.36%
Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A 1.35%
Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B 1.14%
NextEra Energy Inc Unit 1.12%
Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 1.08%
Avantor Inc Ser A 0.99%

PFF’s Top Holdings are Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A, BlackRock Cash Funds Treasury SL Agency, Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-, Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-, and ArcelorMittal S.A. 5.5% at 2.54%, 2.3%, 1.79%, 1.49%, and 1.36%.

Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A (1.35%), Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B (1.14%), and NextEra Energy Inc Unit (1.12%) have a slightly smaller but still significant weight. Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 and Avantor Inc Ser A are also represented in the PFF’s holdings at 1.08% and 0.99%.

Performance

Annual Returns

VOO vs. PFF - Annual Returns

Year VOO PFF
2020 18.35% 7.94%
2019 31.46% 15.62%
2018 -4.42% -4.77%
2017 21.78% 8.33%
2016 11.93% 1.26%
2015 1.35% 4.62%
2014 13.63% 13.45%
2013 32.33% -0.59%
2012 15.98% 18.25%
2011 2.09% -2.2%
2010 0.0% 13.96%

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 2012 was the strongest year for PFF, returning 18.25% on an annual basis. The poorest year for PFF in the last ten years was 2018, with a yield of -4.77%. Most years the iShares Preferred and Income Securities ETF has given investors modest returns, such as in 2015, 2020, and 2017, when gains were 4.62%, 7.94%, and 8.33% respectively.

Portfolio Growth

VOO vs. PFF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VOO $10,000 $36,575 14.45%
PFF $10,000 $17,789 6.90%

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 PFF, the end total would have been $17,789. This equates to a $7,789 profit over 10 years and a compound annual growth rate (CAGR) of 6.90%.

VOO’s CAGR is 7.55 percentage points higher than that of PFF and as a result, would have yielded $18,786 more on a $10,000 investment. Thus, VOO outperformed PFF by 7.55% annually.


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