VT vs. BIV: What’s The Difference?

The Vanguard Total World Stock Index Fund ETF Shares (VT) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. VT is a Vanguard N/A fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between VT and BIV? And which fund is better?

The expense ratio of VT is 0.03 percentage points higher than BIV’s (0.08% vs. 0.05%). VT also has a high exposure to the technology sector while BIV is mostly comprised of AAA bonds. Overall, VT has provided higher returns than BIV over the past 11 years.

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

Summary

VT BIV
Name Vanguard Total World Stock Index Fund ETF Shares Vanguard Intermediate-Term Bond Index Fund ETF Shares
Category N/A Intermediate-Term Bond
Issuer Vanguard Vanguard
AUM 30.44B 39.05B
Avg. Return 10.42% 5.31%
Div. Yield 1.65% 2.06%
Expense Ratio 0.08% 0.05%

The Vanguard Total World Stock Index Fund ETF Shares (VT) is a N/A fund that is issued by Vanguard. It currently has 30.44B total assets under management and has yielded an average annual return of 10.42% over the past 10 years. The fund has a dividend yield of 1.65% with an expense ratio of 0.08%.

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%.

VT’s dividend yield is 0.41% lower than that of BIV (1.65% vs. 2.06%). Also, VT yielded on average 5.10% more per year over the past decade (10.42% vs. 5.31%). The expense ratio of VT is 0.03 percentage points higher than BIV’s (0.08% vs. 0.05%).

Fund Composition

Holdings

VT - Holdings

VT Holdings Weight
Apple Inc 2.85%
Microsoft Corp 2.71%
Amazon.com Inc 1.98%
Facebook Inc Class A 1.1%
Alphabet Inc Class A 0.97%
Alphabet Inc Class C 0.95%
Tesla Inc 0.7%
NVIDIA Corp 0.64%
JPMorgan Chase & Co 0.62%
Tencent Holdings Ltd 0.6%

VT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 2.85%, 2.71%, 1.98%, 1.1%, and 0.97%.

Alphabet Inc Class C (0.95%), Tesla Inc (0.7%), and NVIDIA Corp (0.64%) have a slightly smaller but still significant weight. JPMorgan Chase & Co and Tencent Holdings Ltd are also represented in the VT’s holdings at 0.62% and 0.6%.

BIV - Holdings

BIV Bond Sectors Weight
AAA 54.51%
BBB 25.24%
A 16.97%
AA 3.1%
Others 0.15%
Below B 0.03%
B 0.0%
BB 0.0%
US Government 0.0%

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.

Risk Analysis

VT BIV
Mean Return 0.9 0.35
R-squared 99.35 95.12
Std. Deviation 14.19 4.09
Alpha 0.2 -0.07
Beta 1.01 1.33
Sharpe Ratio 0.71 0.89
Treynor Ratio 9.5 2.72

The Vanguard Total World Stock Index Fund ETF Shares (VT) has a Alpha of 0.2 with a R-squared of 99.35 and a Sharpe Ratio of 0.71. Its Standard Deviation is 14.19 while VT’s Treynor Ratio is 9.5. Furthermore, the fund has a Mean Return of 0.9 and a Beta of 1.01.

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Treynor Ratio of 2.72 with a Alpha of -0.07 and a R-squared of 95.12. Its Beta is 1.33 while BIV’s Standard Deviation is 4.09. Furthermore, the fund has a Mean Return of 0.35 and a Sharpe Ratio of 0.89.

VT’s Mean Return is 0.55 points higher than that of BIV and its R-squared is 4.23 points higher. With a Standard Deviation of 14.19, VT is slightly more volatile than BIV. The Alpha and Beta of VT are 0.27 points higher and 0.32 points lower than BIV’s Alpha and Beta.

Performance

Annual Returns

VT vs. BIV - Annual Returns

Year VT BIV
2020 16.74% 9.71%
2019 26.8% 10.19%
2018 -9.67% -0.09%
2017 24.19% 3.8%
2016 8.77% 2.86%
2015 -1.88% 1.23%
2014 3.97% 7.0%
2013 22.98% -3.44%
2012 17.33% 7.02%
2011 -7.71% 10.62%
2010 13.05% 9.55%

VT had its best year in 2019 with an annual return of 26.8%. VT’s worst year over the past decade yielded -9.67% and occurred in 2018. In most years the Vanguard Total World Stock Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 8.77%, 13.05%, and 16.74% 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.

Portfolio Growth

VT vs. BIV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VT $10,000 $27,739 10.42%
BIV $10,000 $17,492 5.31%

A $10,000 investment in VT would have resulted in a final balance of $27,739. This is a profit of $17,739 over 11 years and amounts to a compound annual growth rate (CAGR) of 10.42%.

With a $10,000 investment in BIV, the end total would have been $17,492. This equates to a $7,492 profit over 11 years and a compound annual growth rate (CAGR) of 5.31%.

VT’s CAGR is 5.10 percentage points higher than that of BIV and as a result, would have yielded $10,247 more on a $10,000 investment. Thus, VT outperformed BIV by 5.10% annually.


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