The Vanguard Value Index Fund ETF Shares (VTV) and the iShares Gold Trust (IAU) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and IAU is a iShares N/A fund. So, what’s the difference between VTV and IAU? And which fund is better?
The expense ratio of VTV is 0.21 percentage points lower than IAU’s (0.04% vs. 0.25%). VTV also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VTV has provided higher returns than IAU over the past ten years.
In this article, we’ll compare VTV vs. IAU. We’ll look at industry exposure and portfolio growth, as well as at their fund composition and performance. Moreover, I’ll also discuss VTV’s and IAU’s holdings, risk metrics, and annual returns and examine how these affect their overall returns.
|Name||Vanguard Value Index Fund ETF Shares||iShares Gold Trust|
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 Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.
VTV’s dividend yield is 2.15% higher than that of IAU (2.15% vs. 0.0%). Also, VTV yielded on average 6.04% more per year over the past decade (12.07% vs. 6.03%). The expense ratio of VTV is 0.21 percentage points lower than IAU’s (0.04% vs. 0.25%).
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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 Gold Trust (IAU) has the most exposure to the Technology sector at 0.0%. This is followed by Industrials and Energy at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.
IAU’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Energy stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
VTV is 22.81% more exposed to the Financial Services sector than IAU (22.81% vs 0.0%). VTV’s exposure to Healthcare and Industrials stocks is 19.84% higher and 12.61% higher respectively (19.84% vs. 0.0% and 12.61% vs. 0.0%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 12.17% more of the fund’s holdings compared to IAU (12.17% vs. 0.00%).
|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%.
IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.
N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.
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The Vanguard Value Index Fund ETF Shares (VTV) has a Standard Deviation of 13.78 with a Beta of 0.98 and a R-squared of 92.61. Its Treynor Ratio is 11.94 while VTV’s Alpha is -1.92. Furthermore, the fund has a Sharpe Ratio of 0.87 and a Mean Return of 1.05.
The iShares Gold Trust (IAU) has a Treynor Ratio of 1.5 with a Alpha of 4.16 and a Sharpe Ratio of 0.13. Its Mean Return is 0.23 while IAU’s Beta is 0.48. Furthermore, the fund has a R-squared of 16.03 and a Standard Deviation of 16.97.
VTV’s Mean Return is 0.82 points higher than that of IAU and its R-squared is 76.58 points higher. With a Standard Deviation of 13.78, VTV is slightly less volatile than IAU. The Alpha and Beta of VTV are 6.08 points lower and 0.50 points higher than IAU’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 2010 was the strongest year for IAU, returning 27.93% on an annual basis. The poorest year for IAU in the last ten years was 2013, with a yield of -27.96%. Most years the iShares Gold Trust has given investors modest returns, such as in 2012, 2011, and 2016, when gains were 8.37%, 8.66%, and 8.85% 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 IAU, the end total would have been $16,786. This equates to a $6,786 profit over 11 years and a compound annual growth rate (CAGR) of 6.03%.
VTV’s CAGR is 6.04 percentage points higher than that of IAU and as a result, would have yielded $16,377 more on a $10,000 investment. Thus, VTV outperformed IAU by 6.04% annually.
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