The Vanguard Value Index Fund ETF Shares (VTV) and the iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and IGSB is a iShares Short-Term Bond fund. So, what’s the difference between VTV and IGSB? And which fund is better?
The expense ratio of VTV is 0.02 percentage points lower than IGSB’s (0.04% vs. 0.06%). VTV also has a high exposure to the financial services sector while IGSB is mostly comprised of BBB bonds. Overall, VTV has provided higher returns than IGSB over the past ten years.
In this article, we’ll compare VTV vs. IGSB. We’ll look at annual returns and performance, as well as at their risk metrics and portfolio growth. Moreover, I’ll also discuss VTV’s and IGSB’s holdings, fund composition, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Value Index Fund ETF Shares||iShares 1-5 Year Investment Grade Corporate Bond ETF|
|Category||Large Value||Short-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 iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.
VTV’s dividend yield is 0.13% higher than that of IGSB (2.15% vs. 2.02%). Also, VTV yielded on average 9.57% more per year over the past decade (12.07% vs. 2.51%). The expense ratio of VTV is 0.02 percentage points lower than IGSB’s (0.04% vs. 0.06%).
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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%.
|IGSB Bond Sectors||Weight|
IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.
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The Vanguard Value Index Fund ETF Shares (VTV) has a Sharpe Ratio of 0.87 with a Beta of 0.98 and a Treynor Ratio of 11.94. Its Alpha is -1.92 while VTV’s R-squared is 92.61. Furthermore, the fund has a Standard Deviation of 13.78 and a Mean Return of 1.05.
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Standard Deviation of 2 with a Treynor Ratio of 4.82 and a Beta of 0.34. Its Mean Return is 0.19 while IGSB’s Sharpe Ratio is 0.82. Furthermore, the fund has a Alpha of 0.69 and a R-squared of 26.13.
VTV’s Mean Return is 0.86 points higher than that of IGSB and its R-squared is 66.48 points higher. With a Standard Deviation of 13.78, VTV is slightly more volatile than IGSB. The Alpha and Beta of VTV are 2.61 points lower and 0.64 points higher than IGSB’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 IGSB, returning 7.01% on an annual basis. The poorest year for IGSB in the last ten years was 2015, with a yield of 0.7%. Most years the iShares 1-5 Year Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2011, 2017, and 2016, when gains were 1.34%, 1.41%, and 1.77% 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 IGSB, the end total would have been $13,103. This equates to a $3,103 profit over 11 years and a compound annual growth rate (CAGR) of 2.51%.
VTV’s CAGR is 9.57 percentage points higher than that of IGSB and as a result, would have yielded $20,060 more on a $10,000 investment. Thus, VTV outperformed IGSB by 9.57% annually.
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