The Vanguard Growth Index Fund ETF Shares (VUG) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between VUG and BIV? And which fund is better?
The expense ratio of VUG is 0.01 percentage points lower than BIV’s (0.04% vs. 0.05%). VUG also has a high exposure to the technology sector while BIV is mostly comprised of AAA bonds. Overall, VUG has provided higher returns than BIV over the past ten years.
In this article, we’ll compare VUG vs. BIV. We’ll look at industry exposure and fund composition, as well as at their risk metrics and performance. Moreover, I’ll also discuss VUG’s and BIV’s portfolio growth, annual returns, and holdings and examine how these affect their overall returns.
|Name||Vanguard Growth Index Fund ETF Shares||Vanguard Intermediate-Term Bond Index Fund ETF Shares|
|Category||Large Growth||Intermediate-Term Bond|
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%.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.
VUG’s dividend yield is 1.49% lower than that of BIV (0.57% vs. 2.06%). Also, VUG yielded on average 12.26% more per year over the past decade (17.58% vs. 5.31%). The expense ratio of VUG is 0.01 percentage points lower than BIV’s (0.04% vs. 0.05%).
|Facebook Inc Class A||3.89%|
|Alphabet Inc Class A||3.43%|
|Alphabet Inc Class C||3.22%|
|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%.
|BIV Bond Sectors||Weight|
BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.
The Vanguard Growth Index Fund ETF Shares (VUG) has a R-squared of 92.48 with a Beta of 1.04 and a Alpha of 1.81. Its Mean Return is 1.44 while VUG’s Treynor Ratio is 16.13. Furthermore, the fund has a Sharpe Ratio of 1.13 and a Standard Deviation of 14.76.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Treynor Ratio of 2.72 with a Alpha of -0.07 and a Mean Return of 0.35. Its Beta is 1.33 while BIV’s Standard Deviation is 4.09. Furthermore, the fund has a Sharpe Ratio of 0.89 and a R-squared of 95.12.
VUG’s Mean Return is 1.09 points higher than that of BIV and its R-squared is 2.64 points lower. With a Standard Deviation of 14.76, VUG is slightly more volatile than BIV. The Alpha and Beta of VUG are 1.88 points higher and 0.29 points lower than BIV’s Alpha and Beta.
VUG had its best year in 2020 with an annual return of 40.16%. VUG’s worst year over the past decade yielded -3.32% and occurred in 2018. In most years the Vanguard Growth Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 13.62%, 17.03%, and 17.11% respectively.
The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VUG would have resulted in a final balance of $54,735. This is a profit of $44,735 over 11 years and amounts to a compound annual growth rate (CAGR) of 17.58%.
With a $10,000 investment in BIV, the end total would have been $17,492. This equates to a $7,492 profit over 11 years and a compound annual growth rate (CAGR) of 5.31%.
VUG’s CAGR is 12.26 percentage points higher than that of BIV and as a result, would have yielded $37,243 more on a $10,000 investment. Thus, VUG outperformed BIV by 12.26% annually.
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