The Vanguard Value Index Fund ETF Shares (VTV) and the Vanguard Growth Index Fund ETF Shares (VUG) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and VUG is a Vanguard Large Growth fund. So, what’s the difference between VTV and VUG? And which fund is better?
VTV and VUG 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 VUG over the past ten years.
In this article, we’ll compare VTV vs. VUG. We’ll look at holdings and fund composition, as well as at their annual returns and portfolio growth. Moreover, I’ll also discuss VTV’s and VUG’s risk metrics, industry exposure, and performance and examine how these affect their overall returns.
Summary
| VTV | VUG | |
| Name | Vanguard Value Index Fund ETF Shares | Vanguard Growth Index Fund ETF Shares |
| Category | Large Value | Large Growth |
| Issuer | Vanguard | Vanguard |
| AUM | 125.77B | 165.53B |
| Avg. Return | 12.07% | 17.58% |
| Div. Yield | 2.15% | 0.57% |
| Expense Ratio | 0.04% | 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 Growth Index Fund ETF Shares (VUG) is a Large Growth fund that is issued by Vanguard. It currently has 165.53B total assets under management and has yielded an average annual return of 17.58% over the past 10 years. The fund has a dividend yield of 0.57% with an expense ratio of 0.04%.
VTV’s dividend yield is 1.58% higher than that of VUG (2.15% vs. 0.57%). Also, VTV yielded on average 5.50% less per year over the past decade (12.07% vs. 17.58%). VTV and VUG have the same expense ratio: 0.04%.
Fund Composition
Industry Exposure
| VTV | VUG | |
| Technology | 7.86% | 39.05% |
| Industrials | 12.61% | 5.13% |
| Energy | 5.59% | 0.32% |
| Communication Services | 5.49% | 16.49% |
| Utilities | 5.37% | 0.0% |
| Healthcare | 19.84% | 8.09% |
| Consumer Defensive | 10.72% | 2.41% |
| Real Estate | 3.01% | 2.46% |
| Financial Services | 22.81% | 6.75% |
| Consumer Cyclical | 3.79% | 17.78% |
| Basic Materials | 2.91% | 1.52% |
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 Growth Index Fund ETF Shares (VUG) has the most exposure to the Technology sector at 39.05%. This is followed by Consumer Cyclical and Communication Services at 17.78% and 16.49% respectively. Energy (0.32%), Basic Materials (1.52%), and Consumer Defensive (2.41%) only make up 4.25% of the fund’s total assets.
VUG’s mid-section with moderate exposure is comprised of Real Estate, Industrials, Financial Services, Healthcare, and Communication Services stocks at 2.46%, 5.13%, 6.75%, 8.09%, and 16.49%.
VTV is 16.06% more exposed to the Financial Services sector than VUG (22.81% vs 6.75%). VTV’s exposure to Healthcare and Industrials stocks is 11.75% higher and 7.48% higher respectively (19.84% vs. 8.09% and 12.61% vs. 5.13%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 8.07% less of the fund’s holdings compared to VUG (12.17% vs. 20.24%).
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%.
| VUG Holdings | Weight |
| Apple Inc | 10.13% |
| Microsoft Corp | 9.52% |
| Amazon.com Inc | 6.88% |
| Facebook Inc Class A | 3.89% |
| Alphabet Inc Class A | 3.43% |
| Alphabet Inc Class C | 3.22% |
| Tesla Inc | 2.44% |
| NVIDIA Corp | 2.21% |
| Visa Inc Class A | 1.78% |
| PayPal Holdings Inc | 1.6% |
VUG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.13%, 9.52%, 6.88%, 3.89%, and 3.43%.
Alphabet Inc Class C (3.22%), Tesla Inc (2.44%), and NVIDIA Corp (2.21%) have a slightly smaller but still significant weight. Visa Inc Class A and PayPal Holdings Inc are also represented in the VUG’s holdings at 1.78% and 1.6%.
Risk Analysis
| VTV | VUG | |
| Mean Return | 1.05 | 1.44 |
| R-squared | 92.61 | 92.48 |
| Std. Deviation | 13.78 | 14.76 |
| Alpha | -1.92 | 1.81 |
| Beta | 0.98 | 1.04 |
| Sharpe Ratio | 0.87 | 1.13 |
| Treynor Ratio | 11.94 | 16.13 |
The Vanguard Value Index Fund ETF Shares (VTV) has a Standard Deviation of 13.78 with a Beta of 0.98 and a Mean Return of 1.05. Its Alpha is -1.92 while VTV’s Sharpe Ratio is 0.87. Furthermore, the fund has a Treynor Ratio of 11.94 and a R-squared of 92.61.
The Vanguard Growth Index Fund ETF Shares (VUG) has a Treynor Ratio of 16.13 with a Standard Deviation of 14.76 and a Sharpe Ratio of 1.13. Its Beta is 1.04 while VUG’s Mean Return is 1.44. Furthermore, the fund has a R-squared of 92.48 and a Alpha of 1.81.
VTV’s Mean Return is 0.39 points lower than that of VUG and its R-squared is 0.13 points higher. With a Standard Deviation of 13.78, VTV is slightly less volatile than VUG. The Alpha and Beta of VTV are 3.73 points lower and 0.06 points lower than VUG’s Alpha and Beta.
Performance
Annual Returns
| Year | VTV | VUG |
| 2020 | 2.23% | 40.16% |
| 2019 | 25.85% | 37.26% |
| 2018 | -5.39% | -3.32% |
| 2017 | 17.12% | 27.8% |
| 2016 | 16.88% | 6.13% |
| 2015 | -0.89% | 3.32% |
| 2014 | 13.19% | 13.62% |
| 2013 | 33.03% | 32.38% |
| 2012 | 15.19% | 17.03% |
| 2011 | 1.16% | 1.87% |
| 2010 | 14.45% | 17.11% |
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 2020 was the strongest year for VUG, returning 40.16% on an annual basis. The poorest year for VUG in the last ten years was 2018, with a yield of -3.32%. Most years the Vanguard Growth Index Fund ETF Shares has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 13.62%, 17.03%, and 17.11% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VTV | $10,000 | $33,163 | 12.07% |
| VUG | $10,000 | $54,735 | 17.58% |
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 VUG, the end total would have been $54,735. This equates to a $44,735 profit over 11 years and a compound annual growth rate (CAGR) of 17.58%.
VTV’s CAGR is 5.50 percentage points lower than that of VUG and as a result, would have yielded $21,572 less on a $10,000 investment. Thus, VTV performed worse than VUG by 5.50% annually.
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