VTV vs VV: Understanding the Differences

If you’re looking to invest in the stock market, you might be considering two Vanguard ETFs, VTV vs VV.

Both funds are popular among investors and offer exposure to large-cap U.S. stocks. However, they have different investment objectives and risk-return profiles.

In this article, we’ll compare VTV vs VV, so you can make an informed decision about which fund is right for you.

VTV vs VV: Understanding the Differences
VTV vs VV: Understanding the Differences

First, let’s take a look at the fund overview for each ETF. VTV, or the Vanguard Value ETF, tracks the CRSP US Large Cap Value Index and aims to provide exposure to value stocks within the large-cap category. On the other hand, VV, or the Vanguard Large-Cap ETF, tracks the CRSP US Large Cap Index and aims to provide exposure to the entire large-cap U.S. stock market. While both funds have low expense ratios of 0.04%, their different investment objectives result in varying risk-return profiles.

In the next section, we’ll dive into a performance analysis of VTV vs VV. We’ll compare their returns, volatility, and other metrics to see how they’ve performed over time. By the end of this article, you’ll have a better understanding of the differences between these two ETFs and be able to make an informed decision about which one is right for your investment goals.

Key Takeaways VTV vs VV

  • VTV and VV are both Vanguard ETFs that offer exposure to large-cap U.S. stocks, but have different investment objectives and risk-return profiles.
  • VTV tracks the CRSP US Large Cap Value Index and aims to provide exposure to value stocks within the large-cap category, while VV tracks the CRSP US Large Cap Index and aims to provide exposure to the entire large-cap U.S. stock market.
  • A performance analysis of VTV vs VV can help you make an informed decision about which ETF is right for your investment goals.

Fund Overview VTV vs VV

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If you’re looking for a large-cap ETF, Vanguard offers two popular options: Vanguard Value ETF (VTV) and Vanguard Value Index Fund ETF (VV). Both of these funds are designed to provide exposure to U.S. large-cap value stocks. Here’s what you need to know about each fund:

Vanguard Value ETF (VTV)

Vanguard Value ETF (VTV) is an exchange-traded fund that seeks to track the performance of the CRSP US Large Cap Value Index. The fund invests in large-cap U.S. stocks that are considered undervalued by the market. As of December 9, 2023, the fund had a portfolio of 335 holdings, with a total net asset value of $163.7 billion.

VTV is a cost-effective fund with a low expense ratio of 0.04%. This means that for every $10,000 you invest in the fund, you’ll pay just $4 in fees. VTV is also a diversified fund, with exposure to a variety of sectors, including healthcare, financial services, and industrials. If you’re looking for a low-cost, diversified way to invest in large-cap value stocks, VTV is a solid choice.

Vanguard Value Index Fund ETF (VV)

Vanguard Value Index Fund ETF (VV) is an exchange-traded fund that seeks to track the performance of the CRSP US Large Cap Value Index. The fund invests in large-cap U.S. stocks that are considered undervalued by the market. As of December 9, 2023, the fund had a portfolio of 351 holdings, with a total net asset value of $102.5 billion.

VV is also a cost-effective fund with a low expense ratio of 0.08%. While this is slightly higher than VTV’s expense ratio, it’s still considered low compared to other large-cap value funds. VV is also a diversified fund, with exposure to a variety of sectors, including healthcare, financial services, and industrials.

In summary, both VTV and VV are solid options if you’re looking for exposure to large-cap U.S. value stocks. VTV has a lower expense ratio than VV, but both funds are cost-effective compared to other large-cap value funds. Additionally, both funds are diversified and offer exposure to a variety of sectors.

Performance Analysis VTV vs VV

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Historical Performance

When comparing the historical performance of VTV and VV, it is important to note that both ETFs have shown strong returns over the long term. According to ETF Insider, VV has outperformed VTV in terms of annual returns, with an average annual return of 16.98% compared to VTV’s 14.94% over the past decade. However, VTV has shown more consistent returns over the past five years, with an average annual return of 18.07% compared to VV’s 17.16%.

Risk Metrics

When it comes to risk analysis, it is important to consider both alpha and beta. According to Seeking Alpha, VV has a higher beta than VTV, which means it is more volatile and has a higher potential for returns and losses. On the other hand, VTV has a higher alpha, which means it has outperformed its benchmark index. Additionally, both ETFs have a similar Sharpe ratio, which measures the risk-adjusted returns of an investment.

Dividend Analysis

Both VTV and VV are known for their dividend yields, making them popular choices for income investors. According to Money Main St., VTV has a higher dividend yield than VV, with a current yield of 2.52% compared to VV’s 1.64%. Additionally, VTV has a higher dividend-to-price ratio, which measures the amount of dividends paid out relative to the price of the ETF.

In summary, when comparing the historical performance, risk metrics, and dividend analysis of VTV and VV, it is clear that both ETFs have their strengths and weaknesses. VV has shown stronger average annual returns over the past decade, but VTV has shown more consistent returns over the past five years. When it comes to risk analysis, VV is more volatile but has a higher potential for returns, while VTV has outperformed its benchmark index. Finally, VTV has a higher dividend yield and dividend-to-price ratio, making it a popular choice for income investors.

Portfolio Composition

When it comes to investing in stocks, it’s important to understand the composition of the portfolio you’re investing in. In the case of VTV and VV, both funds track different indexes, which means they have different portfolio compositions.

Sector Allocation

VTV, the Vanguard Value ETF, has the most exposure to the Healthcare sector at 19.88%. This is followed by Financial Services and Industrials at 19.56% and 12.60% respectively. The fund also has exposure to Technology, Consumer Defensive, and Real Estate sectors at 11.64%, 10.85%, and 6.68% respectively.

On the other hand, VV, the Vanguard Large-Cap ETF, has the most exposure to the Technology sector at 30.28%. This is followed by Healthcare and Financial Services at 14.95% and 14.17% respectively. The fund also has exposure to Consumer Cyclical, Industrials, and Communication Services sectors at 12.86%, 11.95%, and 9.28% respectively.

Top Holdings

VTV’s top holdings include Berkshire Hathaway Inc Class B, Johnson & Johnson, and Procter & Gamble Co, which make up 8.88%, 5.47%, and 4.63% of the portfolio respectively. Meanwhile, VV’s top holdings include Apple Inc, Microsoft Corp, and Amazon.com Inc, which make up 6.81%, 5.71%, and 4.19% of the portfolio respectively.

It’s important to note that while both funds have exposure to similar sectors, the weightings of those sectors and individual holdings can vary significantly. As always, it’s important to do your own research and consider your investment goals before making any investment decisions.

Comparative Analysis

VTV vs VV

When it comes to ETFs, VTV and VV are two popular options that investors often compare. VTV tracks the CRSP US Large Cap Value Index, while VV tracks the CRSP US Large Cap Growth Index. Both ETFs are issued by Vanguard and have a similar expense ratio of 0.04%.

One key difference between VTV and VV is their focus on either value or growth stocks. VTV invests in companies that are considered undervalued by the market, while VV invests in companies that are expected to have higher earnings growth rates than the average company. This difference in investment strategy is reflected in the companies each ETF holds.

VTV has a higher historical earnings-to-price ratio than VV, which suggests that VTV’s holdings may be undervalued compared to VV’s holdings. Additionally, VTV has a higher sales-to-price ratio than VV, which suggests that VTV’s holdings may be generating more revenue per dollar invested compared to VV’s holdings.

Growth vs Value

The decision to invest in growth or value stocks ultimately depends on your investment goals and risk tolerance. Growth stocks tend to have higher earnings growth rates and may offer more potential for capital appreciation, but they also tend to be more volatile and carry more risk. Value stocks, on the other hand, tend to be more stable and may offer more consistent dividend income, but they may not have as much potential for capital appreciation.

If you are looking for a long-term investment strategy, a combination of growth and value stocks may be the best approach. This can help balance out the risks and potential rewards of each type of stock and provide a diversified portfolio.

In conclusion, VTV and VV are both solid ETF options for investors, but they have different investment strategies and focus on different types of stocks. It is important to consider your investment goals and risk tolerance when deciding which ETF to invest in.

Investment Considerations

When deciding between VTV and VV, there are several investment considerations to keep in mind.

Market Cap and Valuation

VTV is a value-oriented fund that tracks the CRSP US Large Cap Value Index. As of December 9, 2023, the fund has a market cap of $139.68 billion and an expense ratio of 0.04%. On the other hand, VV tracks the CRSP US Large Cap Index and has a market cap of $165.42 billion and an expense ratio of 0.04%.

When looking at valuation, VTV has a lower price-to-earnings (P/E) ratio compared to VV. As of December 9, 2023, VTV has a P/E ratio of 23.64, while VV has a P/E ratio of 28.14. However, it’s important to note that P/E ratios can vary over time and may not always be a reliable indicator of valuation.

Economic Impact

Both VTV and VV are influenced by economic factors such as interest rates, inflation, and economic growth. In times of economic recovery, value stocks like those in VTV tend to outperform growth stocks like those in VV. This is because value stocks are often undervalued by the market and can benefit from an economic rebound.

However, it’s important to keep in mind that past performance is not a guarantee of future results. Additionally, the economic recovery can be unpredictable and may not always follow historical patterns.

When considering the potential impact of economic factors on your investment, it may be helpful to use tools such as Portfolio Visualizer or the Center for Research in Security Prices to analyze historical data and simulate different scenarios.

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