The Vanguard Value Index Fund ETF Shares (VTV) and the iShares MBS ETF (MBB) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and MBB is a iShares Intermediate Government fund. So, what’s the difference between VTV and MBB? And which fund is better?
The expense ratio of VTV is 0.02 percentage points lower than MBB’s (0.04% vs. 0.06%). VTV also has a high exposure to the financial services sector while MBB is mostly comprised of AAA bonds. Overall, VTV has provided higher returns than MBB over the past ten years.
In this article, we’ll compare VTV vs. MBB. We’ll look at holdings and fund composition, as well as at their risk metrics and portfolio growth. Moreover, I’ll also discuss VTV’s and MBB’s industry exposure, annual returns, and performance and examine how these affect their overall returns.
|Name||Vanguard Value Index Fund ETF Shares||iShares MBS ETF|
|Category||Large Value||Intermediate Government|
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 MBS ETF (MBB) is a Intermediate Government fund that is issued by iShares. It currently has 25.69B total assets under management and has yielded an average annual return of 3.08% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.06%.
VTV’s dividend yield is 0.27% higher than that of MBB (2.15% vs. 1.88%). Also, VTV yielded on average 9.00% more per year over the past decade (12.07% vs. 3.08%). The expense ratio of VTV is 0.02 percentage points lower than MBB’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%.
|MBB Bond Sectors||Weight|
MBB’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.51%, 0.49%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
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The Vanguard Value Index Fund ETF Shares (VTV) has a Beta of 0.98 with a Treynor Ratio of 11.94 and a Alpha of -1.92. Its Mean Return is 1.05 while VTV’s R-squared is 92.61. Furthermore, the fund has a Sharpe Ratio of 0.87 and a Standard Deviation of 13.78.
The iShares MBS ETF (MBB) has a Treynor Ratio of 3.02 with a Sharpe Ratio of 0.87 and a Standard Deviation of 2.12. Its Mean Return is 0.2 while MBB’s Beta is 0.6. Furthermore, the fund has a R-squared of 74.38 and a Alpha of 0.14.
VTV’s Mean Return is 0.85 points higher than that of MBB and its R-squared is 18.23 points higher. With a Standard Deviation of 13.78, VTV is slightly more volatile than MBB. The Alpha and Beta of VTV are 2.06 points lower and 0.38 points higher than MBB’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 MBB, returning 6.27% on an annual basis. The poorest year for MBB in the last ten years was 2013, with a yield of -1.92%. Most years the iShares MBS ETF has given investors modest returns, such as in 2012, 2017, and 2020, when gains were 2.23%, 2.37%, and 4.03% 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 MBB, the end total would have been $13,906. This equates to a $3,906 profit over 11 years and a compound annual growth rate (CAGR) of 3.08%.
VTV’s CAGR is 9.00 percentage points higher than that of MBB and as a result, would have yielded $19,257 more on a $10,000 investment. Thus, VTV outperformed MBB by 9.00% annually.
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