The Vanguard Value Index Fund ETF Shares (VTV) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between VTV and EMB? And which fund is better?
The expense ratio of VTV is 0.35 percentage points lower than EMB’s (0.04% vs. 0.39%). VTV also has a high exposure to the financial services sector while EMB is mostly comprised of BBB bonds. Overall, VTV has provided higher returns than EMB over the past ten years.
In this article, we’ll compare VTV vs. EMB. We’ll look at portfolio growth and risk metrics, as well as at their industry exposure and performance. Moreover, I’ll also discuss VTV’s and EMB’s fund composition, holdings, and annual returns and examine how these affect their overall returns.
|Name||Vanguard Value Index Fund ETF Shares||iShares J.P. Morgan USD Emerging Markets Bond ETF|
|Category||Large Value||Emerging Markets 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 iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) is a Emerging Markets Bond fund that is issued by iShares. It currently has 19.76B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 3.85% with an expense ratio of 0.39%.
VTV’s dividend yield is 1.70% lower than that of EMB (2.15% vs. 3.85%). Also, VTV yielded on average 5.64% more per year over the past decade (12.07% vs. 6.43%). The expense ratio of VTV is 0.35 percentage points lower than EMB’s (0.04% vs. 0.39%).
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|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%.
|EMB Bond Sectors||Weight|
EMB’s Top Bond Sectors are ratings of BBB, B, BB, A, and AA at 33.79%, 21.97%, 16.92%, 13.67%, and 7.97%. The fund is less weighted towards Below B (4.49%), Others (1.11%), and AAA (0.09%) rated bonds.
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The Vanguard Value Index Fund ETF Shares (VTV) has a Treynor Ratio of 11.94 with a Mean Return of 1.05 and a Alpha of -1.92. Its R-squared is 92.61 while VTV’s Sharpe Ratio is 0.87. Furthermore, the fund has a Beta of 0.98 and a Standard Deviation of 13.78.
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a Beta of 1.36 with a Mean Return of 0.44 and a Alpha of 0.89. Its Sharpe Ratio is 0.55 while EMB’s R-squared is 23.34. Furthermore, the fund has a Treynor Ratio of 3.24 and a Standard Deviation of 8.44.
VTV’s Mean Return is 0.61 points higher than that of EMB and its R-squared is 69.27 points higher. With a Standard Deviation of 13.78, VTV is slightly more volatile than EMB. The Alpha and Beta of VTV are 2.81 points lower and 0.38 points lower than EMB’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 2012 was the strongest year for EMB, returning 17.64% on an annual basis. The poorest year for EMB in the last ten years was 2013, with a yield of -7.42%. Most years the iShares J.P. Morgan USD Emerging Markets Bond ETF has given investors modest returns, such as in 2014, 2011, and 2016, when gains were 6.69%, 7.2%, and 9.41% 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 EMB, the end total would have been $19,295. This equates to a $9,295 profit over 11 years and a compound annual growth rate (CAGR) of 6.43%.
VTV’s CAGR is 5.64 percentage points higher than that of EMB and as a result, would have yielded $13,868 more on a $10,000 investment. Thus, VTV outperformed EMB by 5.64% annually.
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