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VTV vs. VWO: What’s The Difference?

The Vanguard Value Index Fund ETF Shares (VTV) and the Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and VWO is a Vanguard Diversified Emerging Mkts fund. So, what’s the difference between VTV and VWO? And which fund is better?

The expense ratio of VTV is 0.06 percentage points lower than VWO’s (0.04% vs. 0.1%). VTV also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VTV has provided higher returns than VWO over the past ten years.

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

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Summary

VTVVWO
NameVanguard Value Index Fund ETF SharesVanguard FTSE Emerging Markets Index Fund ETF Shares
CategoryLarge ValueDiversified Emerging Mkts
IssuerVanguardVanguard
AUM125.77B117.28B
Avg. Return12.07%5.79%
Div. Yield2.15%1.98%
Expense Ratio0.04%0.1%

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 FTSE Emerging Markets Index Fund ETF Shares (VWO) is a Diversified Emerging Mkts fund that is issued by Vanguard. It currently has 117.28B total assets under management and has yielded an average annual return of 5.79% over the past 10 years. The fund has a dividend yield of 1.98% with an expense ratio of 0.1%.

VTV’s dividend yield is 0.17% higher than that of VWO (2.15% vs. 1.98%). Also, VTV yielded on average 6.29% more per year over the past decade (12.07% vs. 5.79%). The expense ratio of VTV is 0.06 percentage points lower than VWO’s (0.04% vs. 0.1%).

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Fund Composition

Industry Exposure

VTV vs. VWO - Industry Exposure

VTVVWO
Technology7.86%17.06%
Industrials12.61%5.95%
Energy5.59%5.48%
Communication Services5.49%11.41%
Utilities5.37%2.55%
Healthcare19.84%5.33%
Consumer Defensive10.72%5.87%
Real Estate3.01%3.13%
Financial Services22.81%18.15%
Consumer Cyclical3.79%16.1%
Basic Materials2.91%8.98%

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 FTSE Emerging Markets Index Fund ETF Shares (VWO) has the most exposure to the Financial Services sector at 18.15%. This is followed by Technology and Consumer Cyclical at 17.06% and 16.1% respectively. Real Estate (3.13%), Healthcare (5.33%), and Energy (5.48%) only make up 13.94% of the fund’s total assets.

VWO’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Basic Materials, Communication Services, and Consumer Cyclical stocks at 5.87%, 5.95%, 8.98%, 11.41%, and 16.1%.

VTV is 4.66% more exposed to the Financial Services sector than VWO (22.81% vs 18.15%). VTV’s exposure to Healthcare and Industrials stocks is 14.51% higher and 6.66% higher respectively (19.84% vs. 5.33% and 12.61% vs. 5.95%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 9.61% less of the fund’s holdings compared to VWO (12.17% vs. 21.78%).

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%.

VWO - Holdings

VWO HoldingsWeight
Tencent Holdings Ltd5.29%
Alibaba Group Holding Ltd Ordinary Shares4.73%
Taiwan Semiconductor Manufacturing Co Ltd4.58%
Meituan1.88%
Taiwan Semiconductor Manufacturing Co Ltd ADR1.7%
Reliance Industries Ltd Shs Dematerialised1.06%
Naspers Ltd Class N1.01%
Vale SA0.92%
Infosys Ltd0.91%
China Construction Bank Corp Class H0.84%

VWO’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Taiwan Semiconductor Manufacturing Co Ltd, Meituan, and Taiwan Semiconductor Manufacturing Co Ltd ADR at 5.29%, 4.73%, 4.58%, 1.88%, and 1.7%.

Reliance Industries Ltd Shs Dematerialised (1.06%), Naspers Ltd Class N (1.01%), and Vale SA (0.92%) have a slightly smaller but still significant weight. Infosys Ltd and China Construction Bank Corp Class H are also represented in the VWO’s holdings at 0.91% and 0.84%.

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Risk Analysis

VTVVWO
Mean Return1.050.45
R-squared92.6181.69
Std. Deviation13.7817.64
Alpha-1.92-1.36
Beta0.981.06
Sharpe Ratio0.870.27
Treynor Ratio11.943.14

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

The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) has a Treynor Ratio of 3.14 with a Mean Return of 0.45 and a Sharpe Ratio of 0.27. Its Standard Deviation is 17.64 while VWO’s Alpha is -1.36. Furthermore, the fund has a Beta of 1.06 and a R-squared of 81.69.

VTV’s Mean Return is 0.60 points higher than that of VWO and its R-squared is 10.92 points higher. With a Standard Deviation of 13.78, VTV is slightly less volatile than VWO. The Alpha and Beta of VTV are 0.56 points lower and 0.08 points lower than VWO’s Alpha and Beta.

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Performance

Annual Returns

VTV vs. VWO - Annual Returns

YearVTVVWO
20202.23%15.32%
201925.85%20.4%
2018-5.39%-14.57%
201717.12%31.38%
201616.88%11.75%
2015-0.89%-15.35%
201413.19%0.6%
201333.03%-5.0%
201215.19%18.84%
20111.16%-18.68%
201014.45%18.99%

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 2017 was the strongest year for VWO, returning 31.38% on an annual basis. The poorest year for VWO in the last ten years was 2011, with a yield of -18.68%. Most years the Vanguard FTSE Emerging Markets Index Fund ETF Shares has given investors modest returns, such as in 2014, 2016, and 2020, when gains were 0.6%, 11.75%, and 15.32% respectively.

Portfolio Growth

VTV vs. VWO - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VTV$10,000$33,16312.07%
VWO$10,000$16,2005.79%

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 VWO, the end total would have been $16,200. This equates to a $6,200 profit over 11 years and a compound annual growth rate (CAGR) of 5.79%.

VTV’s CAGR is 6.29 percentage points higher than that of VWO and as a result, would have yielded $16,963 more on a $10,000 investment. Thus, VTV outperformed VWO by 6.29% annually.


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