The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) and the Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) are both among the Top 100 ETFs. VTIP is a Vanguard Inflation-Protected Bond fund and VOE is a Vanguard Mid-Cap Value fund. So, what’s the difference between VTIP and VOE? And which fund is better?
The expense ratio of VTIP is 0.02 percentage points lower than VOE’s (0.05% vs. 0.07%). VTIP is mostly comprised of AAA bonds while VOE has a high exposure to the financial services sector. Overall, VTIP has provided lower returns than VOE over the past 7 years.
In this article, we’ll compare VTIP vs. VOE. We’ll look at industry exposure and holdings, as well as at their risk metrics and performance. Moreover, I’ll also discuss VTIP’s and VOE’s annual returns, portfolio growth, and fund composition and examine how these affect their overall returns.
Summary
| VTIP | VOE | |
| Name | Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares | Vanguard Mid-Cap Value Index Fund ETF Shares |
| Category | Inflation-Protected Bond | Mid-Cap Value |
| Issuer | Vanguard | Vanguard |
| AUM | 50.67B | 26.78B |
| Avg. Return | 1.79% | 12.52% |
| Div. Yield | 1.35% | 1.87% |
| Expense Ratio | 0.05% | 0.07% |
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 Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) is a Mid-Cap Value fund that is issued by Vanguard. It currently has 26.78B total assets under management and has yielded an average annual return of 12.52% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.07%.
VTIP’s dividend yield is 0.52% lower than that of VOE (1.35% vs. 1.87%). Also, VTIP yielded on average 10.73% less per year over the past decade (1.79% vs. 12.52%). The expense ratio of VTIP is 0.02 percentage points lower than VOE’s (0.05% vs. 0.07%).
Fund Composition
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.
| VOE Holdings | Weight |
| Carrier Global Corp Ordinary Shares | 1.28% |
| International Flavors & Fragrances Inc | 1.13% |
| Motorola Solutions Inc | 1.12% |
| Discover Financial Services | 1.09% |
| Welltower Inc | 1.05% |
| Corteva Inc | 0.99% |
| Valero Energy Corp | 0.97% |
| Corning Inc | 0.95% |
| Willis Towers Watson PLC | 0.9% |
| D.R. Horton Inc | 0.89% |
VOE’s Top Holdings are Carrier Global Corp Ordinary Shares, International Flavors & Fragrances Inc, Motorola Solutions Inc, Discover Financial Services, and Welltower Inc at 1.28%, 1.13%, 1.12%, 1.09%, and 1.05%.
Corteva Inc (0.99%), Valero Energy Corp (0.97%), and Corning Inc (0.95%) have a slightly smaller but still significant weight. Willis Towers Watson PLC and D.R. Horton Inc are also represented in the VOE’s holdings at 0.9% and 0.89%.
Risk Analysis
| VTIP | VOE | |
| Mean Return | 0 | 1.05 |
| R-squared | 0 | 88.76 |
| Std. Deviation | 0 | 15.98 |
| Alpha | 0 | -3.77 |
| Beta | 0 | 1.11 |
| Sharpe Ratio | 0 | 0.75 |
| Treynor Ratio | 0 | 10.19 |
The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a R-squared of 0 with a Alpha of 0 and a Mean Return of 0. Its Standard Deviation is 0 while VTIP’s Beta is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Treynor Ratio of 0.
The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a Standard Deviation of 15.98 with a Beta of 1.11 and a Sharpe Ratio of 0.75. Its R-squared is 88.76 while VOE’s Alpha is -3.77. Furthermore, the fund has a Mean Return of 1.05 and a Treynor Ratio of 10.19.
VTIP’s Mean Return is 1.05 points lower than that of VOE and its R-squared is 88.76 points lower. With a Standard Deviation of 0, VTIP is slightly less volatile than VOE. The Alpha and Beta of VTIP are 3.77 points higher and 1.11 points lower than VOE’s Alpha and Beta.
Performance
Annual Returns
| Year | VTIP | VOE |
| 2020 | 4.97% | 2.5% |
| 2019 | 4.83% | 27.98% |
| 2018 | 0.54% | -12.41% |
| 2017 | 0.82% | 17.05% |
| 2016 | 2.71% | 15.26% |
| 2015 | -0.15% | -1.8% |
| 2014 | -1.17% | 13.98% |
| 2013 | -1.55% | 37.65% |
| 2012 | 0.0% | 16.04% |
| 2011 | 0.0% | -0.32% |
| 2010 | 0.0% | 21.83% |
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 2013 was the strongest year for VOE, returning 37.65% on an annual basis. The poorest year for VOE in the last ten years was 2018, with a yield of -12.41%. Most years the Vanguard Mid-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 13.98%, 15.26%, and 16.04% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VTIP | $10,000 | $11,305 | 1.79% |
| VOE | $10,000 | $17,350 | 12.52% |
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 VOE, the end total would have been $17,350. This equates to a $7,350 profit over 7 years and a compound annual growth rate (CAGR) of 12.52%.
VTIP’s CAGR is 10.73 percentage points lower than that of VOE and as a result, would have yielded $6,045 less on a $10,000 investment. Thus, VTIP performed worse than VOE by 10.73% annually.
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