The Vanguard Value Index Fund ETF Shares (VTV) and the Vanguard Total Bond Market Index Fund ETF Shares (BND) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and BND is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between VTV and BND? And which fund is better?
The expense ratio of VTV is 0.01 percentage points higher than BND’s (0.04% vs. 0.03%). VTV also has a high exposure to the financial services sector while BND is mostly comprised of AAA bonds. Overall, VTV has provided higher returns than BND over the past ten years.
In this article, we’ll compare VTV vs. BND. We’ll look at annual returns and performance, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss VTV’s and BND’s portfolio growth, fund composition, and holdings and examine how these affect their overall returns.
|Name||Vanguard Value Index Fund ETF Shares||Vanguard Total Bond Market Index Fund ETF Shares|
|Category||Large Value||Intermediate-Term Bond|
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 Vanguard Total Bond Market Index Fund ETF Shares (BND) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 312.15B total assets under management and has yielded an average annual return of 4.09% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.03%.
VTV’s dividend yield is 0.13% higher than that of BND (2.15% vs. 2.02%). Also, VTV yielded on average 7.98% more per year over the past decade (12.07% vs. 4.09%). The expense ratio of VTV is 0.01 percentage points higher than BND’s (0.04% vs. 0.03%).
FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).
|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%.
|BND Bond Sectors||Weight|
BND’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Below B at 68.72%, 16.17%, 11.87%, 3.34%, and 0.01%. The fund is less weighted towards B (0.0%), BB (0.0%), and US Government (0.0%) rated bonds.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
The Vanguard Value Index Fund ETF Shares (VTV) has a Alpha of -1.92 with a Treynor Ratio of 11.94 and a Mean Return of 1.05. Its R-squared is 92.61 while VTV’s Standard Deviation is 13.78. Furthermore, the fund has a Sharpe Ratio of 0.87 and a Beta of 0.98.
The Vanguard Total Bond Market Index Fund ETF Shares (BND) has a Sharpe Ratio of 0.88 with a Standard Deviation of 3.14 and a Treynor Ratio of 2.64. Its Beta is 1.04 while BND’s Mean Return is 0.28. Furthermore, the fund has a Alpha of -0.14 and a R-squared of 99.34.
VTV’s Mean Return is 0.77 points higher than that of BND and its R-squared is 6.73 points lower. With a Standard Deviation of 13.78, VTV is slightly more volatile than BND. The Alpha and Beta of VTV are 1.78 points lower and 0.06 points lower than BND’s Alpha and Beta.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
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 BND, returning 8.71% on an annual basis. The poorest year for BND in the last ten years was 2013, with a yield of -2.14%. Most years the Vanguard Total Bond Market Index Fund ETF Shares has given investors modest returns, such as in 2017, 2012, and 2014, when gains were 3.62%, 4.04%, and 5.96% 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 BND, the end total would have been $15,456. This equates to a $5,456 profit over 11 years and a compound annual growth rate (CAGR) of 4.09%.
VTV’s CAGR is 7.98 percentage points higher than that of BND and as a result, would have yielded $17,707 more on a $10,000 investment. Thus, VTV outperformed BND by 7.98% annually.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.