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VTV vs. VO: What’s The Difference?

The Vanguard Value Index Fund ETF Shares (VTV) and the Vanguard Mid-Cap Index Fund ETF Shares (VO) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and VO is a Vanguard Mid-Cap Blend fund. So, what’s the difference between VTV and VO? And which fund is better?

VTV and VO have the same expense ratio: 0.04%. VTV also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VTV has provided lower returns than VO over the past ten years.

In this article, we’ll compare VTV vs. VO. We’ll look at industry exposure and performance, as well as at their annual returns and risk metrics. Moreover, I’ll also discuss VTV’s and VO’s fund composition, portfolio growth, and holdings and examine how these affect their overall returns.

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Summary

VTVVO
NameVanguard Value Index Fund ETF SharesVanguard Mid-Cap Index Fund ETF Shares
CategoryLarge ValueMid-Cap Blend
IssuerVanguardVanguard
AUM125.77B154.08B
Avg. Return12.07%14.34%
Div. Yield2.15%1.23%
Expense Ratio0.04%0.04%

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 Mid-Cap Index Fund ETF Shares (VO) is a Mid-Cap Blend fund that is issued by Vanguard. It currently has 154.08B total assets under management and has yielded an average annual return of 14.34% over the past 10 years. The fund has a dividend yield of 1.23% with an expense ratio of 0.04%.

VTV’s dividend yield is 0.92% higher than that of VO (2.15% vs. 1.23%). Also, VTV yielded on average 2.26% less per year over the past decade (12.07% vs. 14.34%). VTV and VO have the same expense ratio: 0.04%.

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Fund Composition

Industry Exposure

VTV vs. VO - Industry Exposure

VTVVO
Technology7.86%22.01%
Industrials12.61%11.92%
Energy5.59%3.82%
Communication Services5.49%5.61%
Utilities5.37%5.12%
Healthcare19.84%13.03%
Consumer Defensive10.72%3.25%
Real Estate3.01%8.67%
Financial Services22.81%11.08%
Consumer Cyclical3.79%12.12%
Basic Materials2.91%3.36%

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 Vanguard Mid-Cap Index Fund ETF Shares (VO) has the most exposure to the Technology sector at 22.01%. This is followed by Healthcare and Consumer Cyclical at 13.03% and 12.12% respectively. Basic Materials (3.36%), Energy (3.82%), and Utilities (5.12%) only make up 12.30% of the fund’s total assets.

VO’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Industrials, and Consumer Cyclical stocks at 5.61%, 8.67%, 11.08%, 11.92%, and 12.12%.

VTV is 11.73% more exposed to the Financial Services sector than VO (22.81% vs 11.08%). VTV’s exposure to Healthcare and Industrials stocks is 6.81% higher and 0.69% higher respectively (19.84% vs. 13.03% and 12.61% vs. 11.92%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 13.74% less of the fund’s holdings compared to VO (12.17% vs. 25.91%).

Holdings

VTV - Holdings

VTV HoldingsWeight
Berkshire Hathaway Inc Class B2.98%
JPMorgan Chase & Co2.82%
Johnson & Johnson2.6%
UnitedHealth Group Inc2.27%
Procter & Gamble Co1.98%
Bank of America Corp1.91%
Exxon Mobil Corp1.6%
Comcast Corp Class A1.57%
Intel Corp1.36%
Verizon Communications Inc1.32%

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%.

VO - Holdings

VO HoldingsWeight
IDEXX Laboratories Inc0.78%
DocuSign Inc0.75%
Marvell Technology Inc0.68%
IQVIA Holdings Inc0.68%
Chipotle Mexican Grill Inc0.63%
Veeva Systems Inc Class A0.62%
Digital Realty Trust Inc0.62%
Centene Corp0.62%
Aptiv PLC0.62%
Carrier Global Corp Ordinary Shares0.61%

VO’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Marvell Technology Inc, IQVIA Holdings Inc, and Chipotle Mexican Grill Inc at 0.78%, 0.75%, 0.68%, 0.68%, and 0.63%.

Veeva Systems Inc Class A (0.62%), Digital Realty Trust Inc (0.62%), and Centene Corp (0.62%) have a slightly smaller but still significant weight. Aptiv PLC and Carrier Global Corp Ordinary Shares are also represented in the VO’s holdings at 0.62% and 0.61%.

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Risk Analysis

VTVVO
Mean Return1.051.14
R-squared92.6192.22
Std. Deviation13.7815.65
Alpha-1.92-2.71
Beta0.981.11
Sharpe Ratio0.870.83
Treynor Ratio11.9411.32

The Vanguard Value Index Fund ETF Shares (VTV) has a Sharpe Ratio of 0.87 with a Standard Deviation of 13.78 and a Treynor Ratio of 11.94. Its Beta is 0.98 while VTV’s Mean Return is 1.05. Furthermore, the fund has a Alpha of -1.92 and a R-squared of 92.61.

The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a R-squared of 92.22 with a Beta of 1.11 and a Alpha of -2.71. Its Sharpe Ratio is 0.83 while VO’s Standard Deviation is 15.65. Furthermore, the fund has a Treynor Ratio of 11.32 and a Mean Return of 1.14.

VTV’s Mean Return is 0.09 points lower than that of VO and its R-squared is 0.39 points higher. With a Standard Deviation of 13.78, VTV is slightly less volatile than VO. The Alpha and Beta of VTV are 0.79 points higher and 0.13 points lower than VO’s Alpha and Beta.

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Performance

Annual Returns

VTV vs. VO - Annual Returns

YearVTVVO
20202.23%18.22%
201925.85%31.04%
2018-5.39%-9.21%
201717.12%19.25%
201616.88%11.23%
2015-0.89%-1.34%
201413.19%13.76%
201333.03%35.15%
201215.19%15.98%
20111.16%-1.96%
201014.45%25.57%

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 VO, returning 35.15% on an annual basis. The poorest year for VO in the last ten years was 2018, with a yield of -9.21%. Most years the Vanguard Mid-Cap Index Fund ETF Shares has given investors modest returns, such as in 2014, 2012, and 2020, when gains were 13.76%, 15.98%, and 18.22% respectively.

Portfolio Growth

VTV vs. VO - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VTV$10,000$33,16312.07%
VO$10,000$40,40414.34%

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 VO, the end total would have been $40,404. This equates to a $30,404 profit over 11 years and a compound annual growth rate (CAGR) of 14.34%.

VTV’s CAGR is 2.26 percentage points lower than that of VO and as a result, would have yielded $7,241 less on a $10,000 investment. Thus, VTV performed worse than VO by 2.26% annually.


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