The Vanguard Value Index Fund ETF Shares (VTV) and the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and VCIT is a Vanguard Corporate Bond fund. So, what’s the difference between VTV and VCIT? And which fund is better?
The expense ratio of VTV is 0.01 percentage points lower than VCIT’s (0.04% vs. 0.05%). VTV also has a high exposure to the financial services sector while VCIT is mostly comprised of BBB bonds. Overall, VTV has provided higher returns than VCIT over the past ten years.
In this article, we’ll compare VTV vs. VCIT. We’ll look at holdings and portfolio growth, as well as at their annual returns and fund composition. Moreover, I’ll also discuss VTV’s and VCIT’s performance, risk metrics, and industry exposure and examine how these affect their overall returns.
Summary
| VTV | VCIT | |
| Name | Vanguard Value Index Fund ETF Shares | Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares |
| Category | Large Value | Corporate Bond |
| Issuer | Vanguard | Vanguard |
| AUM | 125.77B | 48.39B |
| Avg. Return | 12.07% | 5.84% |
| Div. Yield | 2.15% | 2.33% |
| Expense Ratio | 0.04% | 0.05% |
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 Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) is a Corporate Bond fund that is issued by Vanguard. It currently has 48.39B total assets under management and has yielded an average annual return of 5.84% over the past 10 years. The fund has a dividend yield of 2.33% with an expense ratio of 0.05%.
VTV’s dividend yield is 0.18% lower than that of VCIT (2.15% vs. 2.33%). Also, VTV yielded on average 6.23% more per year over the past decade (12.07% vs. 5.84%). The expense ratio of VTV is 0.01 percentage points lower than VCIT’s (0.04% vs. 0.05%).
Fund Composition
Holdings
| VTV Holdings | Weight |
| 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% |
| Intel Corp | 1.36% |
| 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%.
| VCIT Bond Sectors | Weight |
| BBB | 55.28% |
| A | 37.85% |
| AA | 5.22% |
| AAA | 1.57% |
| Below B | 0.08% |
| Others | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
VCIT’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and Below B at 55.28%, 37.85%, 5.22%, 1.57%, and 0.08%. The fund is less weighted towards Others (0.0%), B (0.0%), and BB (0.0%) rated bonds.
Risk Analysis
| VTV | VCIT | |
| Mean Return | 1.05 | 0.44 |
| R-squared | 92.61 | 63.18 |
| Std. Deviation | 13.78 | 5.08 |
| Alpha | -1.92 | 0.89 |
| Beta | 0.98 | 1.35 |
| Sharpe Ratio | 0.87 | 0.91 |
| Treynor Ratio | 11.94 | 3.43 |
The Vanguard Value Index Fund ETF Shares (VTV) has a Sharpe Ratio of 0.87 with a Beta of 0.98 and a R-squared of 92.61. Its Standard Deviation is 13.78 while VTV’s Mean Return is 1.05. Furthermore, the fund has a Treynor Ratio of 11.94 and a Alpha of -1.92.
The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a Sharpe Ratio of 0.91 with a Alpha of 0.89 and a Beta of 1.35. Its Standard Deviation is 5.08 while VCIT’s Mean Return is 0.44. Furthermore, the fund has a R-squared of 63.18 and a Treynor Ratio of 3.43.
VTV’s Mean Return is 0.61 points higher than that of VCIT and its R-squared is 29.43 points higher. With a Standard Deviation of 13.78, VTV is slightly more volatile than VCIT. The Alpha and Beta of VTV are 2.81 points lower and 0.37 points lower than VCIT’s Alpha and Beta.
Performance
Annual Returns
| Year | VTV | VCIT |
| 2020 | 2.23% | 9.55% |
| 2019 | 25.85% | 13.97% |
| 2018 | -5.39% | -1.75% |
| 2017 | 17.12% | 5.5% |
| 2016 | 16.88% | 5.3% |
| 2015 | -0.89% | 0.88% |
| 2014 | 13.19% | 7.47% |
| 2013 | 33.03% | -1.8% |
| 2012 | 15.19% | 11.36% |
| 2011 | 1.16% | 7.94% |
| 2010 | 14.45% | 10.65% |
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 VCIT, returning 13.97% on an annual basis. The poorest year for VCIT in the last ten years was 2013, with a yield of -1.8%. Most years the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2011, when gains were 5.5%, 7.47%, and 7.94% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VTV | $10,000 | $28,976 | 12.07% |
| VCIT | $10,000 | $17,439 | 5.84% |
A $10,000 investment in VTV would have resulted in a final balance of $28,976. This is a profit of $18,976 over 10 years and amounts to a compound annual growth rate (CAGR) of 12.07%.
With a $10,000 investment in VCIT, the end total would have been $17,439. This equates to a $7,439 profit over 10 years and a compound annual growth rate (CAGR) of 5.84%.
VTV’s CAGR is 6.23 percentage points higher than that of VCIT and as a result, would have yielded $11,537 more on a $10,000 investment. Thus, VTV outperformed VCIT by 6.23% annually.
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