The Vanguard Value Index Fund ETF Shares (VTV) and the iShares 1-3 Year Treasury Bond ETF (SHY) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and SHY is a iShares Short Government fund. So, what’s the difference between VTV and SHY? And which fund is better?
The expense ratio of VTV is 0.11 percentage points lower than SHY’s (0.04% vs. 0.15%). VTV also has a high exposure to the financial services sector while SHY is mostly comprised of AAA bonds. Overall, VTV has provided higher returns than SHY over the past ten years.
In this article, we’ll compare VTV vs. SHY. We’ll look at portfolio growth and holdings, as well as at their performance and industry exposure. Moreover, I’ll also discuss VTV’s and SHY’s fund composition, annual returns, and risk metrics and examine how these affect their overall returns.
|Name||Vanguard Value Index Fund ETF Shares||iShares 1-3 Year Treasury Bond ETF|
|Category||Large Value||Short 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 1-3 Year Treasury Bond ETF (SHY) is a Short Government fund that is issued by iShares. It currently has 19.51B total assets under management and has yielded an average annual return of 1.27% over the past 10 years. The fund has a dividend yield of 0.46% with an expense ratio of 0.15%.
VTV’s dividend yield is 1.69% higher than that of SHY (2.15% vs. 0.46%). Also, VTV yielded on average 10.80% more per year over the past decade (12.07% vs. 1.27%). The expense ratio of VTV is 0.11 percentage points lower than SHY’s (0.04% vs. 0.15%).
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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%.
|SHY Bond Sectors||Weight|
SHY’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.67%, 0.33%, 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 Alpha of -1.92 with a Standard Deviation of 13.78 and a Sharpe Ratio of 0.87. Its Beta is 0.98 while VTV’s Treynor Ratio is 11.94. Furthermore, the fund has a Mean Return of 1.05 and a R-squared of 92.61.
The iShares 1-3 Year Treasury Bond ETF (SHY) has a Sharpe Ratio of 0.54 with a Standard Deviation of 0.89 and a Mean Return of 0.09. Its Alpha is -0.03 while SHY’s Beta is 0.18. Furthermore, the fund has a Treynor Ratio of 2.6 and a R-squared of 39.11.
VTV’s Mean Return is 0.96 points higher than that of SHY and its R-squared is 53.50 points higher. With a Standard Deviation of 13.78, VTV is slightly more volatile than SHY. The Alpha and Beta of VTV are 1.89 points lower and 0.80 points higher than SHY’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 SHY, returning 3.42% on an annual basis. The poorest year for SHY in the last ten years was 2013, with a yield of 0.23%. Most years the iShares 1-3 Year Treasury Bond ETF has given investors modest returns, such as in 2014, 2016, and 2011, when gains were 0.48%, 0.75%, and 1.43% 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 SHY, the end total would have been $11,486. This equates to a $1,486 profit over 11 years and a compound annual growth rate (CAGR) of 1.27%.
VTV’s CAGR is 10.80 percentage points higher than that of SHY and as a result, would have yielded $21,677 more on a $10,000 investment. Thus, VTV outperformed SHY by 10.80% annually.
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