The Vanguard Value Index Fund ETF Shares (VTV) and the iShares Core S&P Small-Cap ETF (IJR) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and IJR is a iShares Small Blend fund. So, what’s the difference between VTV and IJR? And which fund is better?
The expense ratio of VTV is 0.02 percentage points lower than IJR’s (0.04% vs. 0.06%). VTV also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VTV has provided lower returns than IJR over the past ten years.
In this article, we’ll compare VTV vs. IJR. We’ll look at risk metrics and industry exposure, as well as at their holdings and annual returns. Moreover, I’ll also discuss VTV’s and IJR’s fund composition, portfolio growth, and performance and examine how these affect their overall returns.
|Name||Vanguard Value Index Fund ETF Shares||iShares Core S&P Small-Cap ETF|
|Category||Large Value||Small Blend|
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 Core S&P Small-Cap ETF (IJR) is a Small Blend fund that is issued by iShares. It currently has 68.64B total assets under management and has yielded an average annual return of 13.97% over the past 10 years. The fund has a dividend yield of 0.96% with an expense ratio of 0.06%.
VTV’s dividend yield is 1.19% higher than that of IJR (2.15% vs. 0.96%). Also, VTV yielded on average 1.89% less per year over the past decade (12.07% vs. 13.97%). The expense ratio of VTV is 0.02 percentage points lower than IJR’s (0.04% vs. 0.06%).
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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 Core S&P Small-Cap ETF (IJR) has the most exposure to the Industrials sector at 17.31%. This is followed by Financial Services and Technology at 15.91% and 14.32% respectively. Communication Services (2.59%), Energy (4.0%), and Consumer Defensive (4.01%) only make up 10.60% of the fund’s total assets.
IJR’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Consumer Cyclical, and Technology stocks at 5.34%, 9.55%, 11.55%, 13.61%, and 14.32%.
VTV is 6.90% more exposed to the Financial Services sector than IJR (22.81% vs 15.91%). VTV’s exposure to Healthcare and Industrials stocks is 8.29% higher and 4.70% lower respectively (19.84% vs. 11.55% and 12.61% vs. 17.31%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 12.79% less of the fund’s holdings compared to IJR (12.17% vs. 24.96%).
|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%.
|BlackRock Cash Funds Treasury SL Agency||1.08%|
|GameStop Corp Class A||0.86%|
|Power Integrations Inc||0.57%|
|Chart Industries Inc||0.53%|
IJR’s Top Holdings are BlackRock Cash Funds Treasury SL Agency, GameStop Corp Class A, Omnicell Inc, Stamps.com Inc, and Saia Inc at 1.08%, 0.86%, 0.61%, 0.58%, and 0.57%.
Power Integrations Inc (0.57%), Exponent Inc (0.54%), and NeoGenomics Inc (0.53%) have a slightly smaller but still significant weight. Chart Industries Inc and Macy’s Inc are also represented in the IJR’s holdings at 0.53% and 0.51%.
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The Vanguard Value Index Fund ETF Shares (VTV) has a R-squared of 92.61 with a Alpha of -1.92 and a Sharpe Ratio of 0.87. Its Beta is 0.98 while VTV’s Mean Return is 1.05. Furthermore, the fund has a Treynor Ratio of 11.94 and a Standard Deviation of 13.78.
The iShares Core S&P Small-Cap ETF (IJR) has a Treynor Ratio of 10.77 with a Beta of 1.2 and a R-squared of 76.03. Its Sharpe Ratio is 0.74 while IJR’s Mean Return is 1.21. Furthermore, the fund has a Alpha of -3.7 and a Standard Deviation of 18.68.
VTV’s Mean Return is 0.16 points lower than that of IJR and its R-squared is 16.58 points higher. With a Standard Deviation of 13.78, VTV is slightly less volatile than IJR. The Alpha and Beta of VTV are 1.78 points higher and 0.22 points lower than IJR’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 2013 was the strongest year for IJR, returning 41.36% on an annual basis. The poorest year for IJR in the last ten years was 2018, with a yield of -8.43%. Most years the iShares Core S&P Small-Cap ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 11.24%, 13.2%, and 16.28% 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 IJR, the end total would have been $38,800. This equates to a $28,800 profit over 11 years and a compound annual growth rate (CAGR) of 13.97%.
VTV’s CAGR is 1.89 percentage points lower than that of IJR and as a result, would have yielded $5,637 less on a $10,000 investment. Thus, VTV performed worse than IJR by 1.89% annually.
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