The Vanguard Value Index Fund ETF Shares (VTV) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and ACWI is a iShares N/A fund. So, what’s the difference between VTV and ACWI? And which fund is better?
The expense ratio of VTV is 0.28 percentage points lower than ACWI’s (0.04% vs. 0.32%). VTV also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VTV has provided higher returns than ACWI over the past ten years.
In this article, we’ll compare VTV vs. ACWI. We’ll look at annual returns and risk metrics, as well as at their holdings and industry exposure. Moreover, I’ll also discuss VTV’s and ACWI’s portfolio growth, fund composition, and performance and examine how these affect their overall returns.
|Name||Vanguard Value Index Fund ETF Shares||iShares MSCI ACWI ETF|
The Vanguard Value Index Fund ETF Shares (VTV) is a Large Value fund that is issued by Vanguard. It currently has 125.77B total assets under management and has yielded an average annual return of 12.07% over the past 10 years. The fund has a dividend yield of 2.15% with an expense ratio of 0.04%.
The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.
VTV’s dividend yield is 0.76% higher than that of ACWI (2.15% vs. 1.39%). Also, VTV yielded on average 1.86% more per year over the past decade (12.07% vs. 10.21%). The expense ratio of VTV is 0.28 percentage points lower than ACWI’s (0.04% vs. 0.32%).
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The Vanguard Value Index Fund ETF Shares (VTV) has the most exposure to the Financial Services sector at 22.81%. This is followed by Healthcare and Industrials at 19.84% and 12.61% respectively. Real Estate (3.01%), Consumer Cyclical (3.79%), and Utilities (5.37%) only make up 12.17% of the fund’s total assets.
VTV’s mid-section with moderate exposure is comprised of Communication Services, Energy, Technology, Consumer Defensive, and Industrials stocks at 5.49%, 5.59%, 7.86%, 10.72%, and 12.61%.
The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.
ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.
VTV is 7.23% more exposed to the Financial Services sector than ACWI (22.81% vs 15.58%). VTV’s exposure to Healthcare and Industrials stocks is 8.10% higher and 2.96% higher respectively (19.84% vs. 11.74% and 12.61% vs. 9.65%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 5.20% less of the fund’s holdings compared to ACWI (12.17% vs. 17.37%).
|Berkshire Hathaway Inc Class B||2.98%|
|JPMorgan Chase & Co||2.82%|
|Johnson & Johnson||2.6%|
|UnitedHealth Group Inc||2.27%|
|Procter & Gamble Co||1.98%|
|Bank of America Corp||1.91%|
|Exxon Mobil Corp||1.6%|
|Comcast Corp Class A||1.57%|
|Verizon Communications Inc||1.32%|
VTV’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.98%, 2.82%, 2.6%, 2.27%, and 1.98%.
Bank of America Corp (1.91%), Exxon Mobil Corp (1.6%), and Comcast Corp Class A (1.57%) have a slightly smaller but still significant weight. Intel Corp and Verizon Communications Inc are also represented in the VTV’s holdings at 1.36% and 1.32%.
|Facebook Inc A||1.25%|
|Alphabet Inc Class C||1.12%|
|Alphabet Inc A||1.09%|
|Taiwan Semiconductor Manufacturing Co Ltd||0.79%|
|JPMorgan Chase & Co||0.71%|
ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.
Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.
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The Vanguard Value Index Fund ETF Shares (VTV) has a R-squared of 92.61 with a Sharpe Ratio of 0.87 and a Mean Return of 1.05. Its Treynor Ratio is 11.94 while VTV’s Alpha is -1.92. Furthermore, the fund has a Standard Deviation of 13.78 and a Beta of 0.98.
The iShares MSCI ACWI ETF (ACWI) has a Beta of 1 with a Standard Deviation of 14.05 and a Sharpe Ratio of 0.71. Its Treynor Ratio is 9.45 while ACWI’s Mean Return is 0.89. Furthermore, the fund has a R-squared of 99.96 and a Alpha of 0.15.
VTV’s Mean Return is 0.16 points higher than that of ACWI and its R-squared is 7.35 points lower. With a Standard Deviation of 13.78, VTV is slightly less volatile than ACWI. The Alpha and Beta of VTV are 2.07 points lower and 0.02 points lower than ACWI’s Alpha and Beta.
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VTV had its best year in 2013 with an annual return of 33.03%. VTV’s worst year over the past decade yielded -5.39% and occurred in 2018. In most years the Vanguard Value Index Fund ETF Shares provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.19%, 14.45%, and 15.19% respectively.
The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VTV would have resulted in a final balance of $33,163. This is a profit of $23,163 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.07%.
With a $10,000 investment in ACWI, the end total would have been $27,241. This equates to a $17,241 profit over 11 years and a compound annual growth rate (CAGR) of 10.21%.
VTV’s CAGR is 1.86 percentage points higher than that of ACWI and as a result, would have yielded $5,922 more on a $10,000 investment. Thus, VTV outperformed ACWI by 1.86% annually.
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