VTIP vs. VLUE: What’s The Difference?

The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) and the iShares MSCI USA Value Factor ETF (VLUE) are both among the Top 100 ETFs. VTIP is a Vanguard Inflation-Protected Bond fund and VLUE is a iShares Large Value fund. So, what’s the difference between VTIP and VLUE? And which fund is better?

The expense ratio of VTIP is 0.10 percentage points lower than VLUE’s (0.05% vs. 0.15%). VTIP is mostly comprised of AAA bonds while VLUE has a high exposure to the technology sector. Overall, VTIP has provided lower returns than VLUE over the past 7 years.

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

Summary

VTIP VLUE
Name Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares iShares MSCI USA Value Factor ETF
Category Inflation-Protected Bond Large Value
Issuer Vanguard iShares
AUM 50.67B 15.95B
Avg. Return 1.79% 8.91%
Div. Yield 1.35% 1.89%
Expense Ratio 0.05% 0.15%

The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.

The iShares MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.

VTIP’s dividend yield is 0.54% lower than that of VLUE (1.35% vs. 1.89%). Also, VTIP yielded on average 7.12% less per year over the past decade (1.79% vs. 8.91%). The expense ratio of VTIP is 0.10 percentage points lower than VLUE’s (0.05% vs. 0.15%).

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Fund Composition

Holdings

VTIP - Holdings

VTIP Bond Sectors Weight
AAA 99.87%
Others 0.13%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.

VLUE - Holdings

VLUE Holdings Weight
AT&T Inc 7.13%
Intel Corp 6.14%
General Motors Co 3.19%
Micron Technology Inc 3.14%
Cisco Systems Inc 3.05%
International Business Machines Corp 2.76%
Target Corp 2.38%
Citigroup Inc 2.32%
Ford Motor Co 2.23%
Pfizer Inc 2.17%

VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.

International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.

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Risk Analysis

VTIP VLUE
Mean Return 0 0
R-squared 0 0
Std. Deviation 0 0
Alpha 0 0
Beta 0 0
Sharpe Ratio 0 0
Treynor Ratio 0 0

The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Alpha of 0 with a R-squared of 0 and a Mean Return of 0. Its Beta is 0 while VTIP’s Sharpe Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a Treynor Ratio of 0.

The iShares MSCI USA Value Factor ETF (VLUE) has a Beta of 0 with a R-squared of 0 and a Standard Deviation of 0. Its Sharpe Ratio is 0 while VLUE’s Mean Return is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Alpha of 0.

VTIP’s Mean Return is 0.00 points lower than that of VLUE and its R-squared is 0.00 points lower. With a Standard Deviation of 0, VTIP is slightly less volatile than VLUE. The Alpha and Beta of VTIP are 0.00 points lower and 0.00 points lower than VLUE’s Alpha and Beta.

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Performance

Annual Returns

VTIP vs. VLUE - Annual Returns

Year VTIP VLUE
2020 4.97% -0.32%
2019 4.83% 27.47%
2018 0.54% -11.18%
2017 0.82% 21.97%
2016 2.71% 15.68%
2015 -0.15% -3.54%
2014 -1.17% 12.29%
2013 -1.55% 0.0%
2012 0.0% 0.0%
2011 0.0% 0.0%
2010 0.0% 0.0%

VTIP had its best year in 2020 with an annual return of 4.97%. VTIP’s worst year over the past decade yielded -1.55% and occurred in 2013. In most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares provided moderate returns such as in 2011, 2010, and 2018 where annual returns amounted to 0.0%, 0.0%, and 0.54% respectively.

The year 2019 was the strongest year for VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

VTIP vs. VLUE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VTIP $10,000 $11,305 1.79%
VLUE $10,000 $17,247 8.91%

A $10,000 investment in VTIP would have resulted in a final balance of $11,305. This is a profit of $1,305 over 7 years and amounts to a compound annual growth rate (CAGR) of 1.79%.

With a $10,000 investment in VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.

VTIP’s CAGR is 7.12 percentage points lower than that of VLUE and as a result, would have yielded $5,942 less on a $10,000 investment. Thus, VTIP performed worse than VLUE by 7.12% annually.


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