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VUG vs. IUSB: What’s The Difference?

The Vanguard Growth Index Fund ETF Shares (VUG) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and IUSB is a iShares N/A fund. So, what’s the difference between VUG and IUSB? And which fund is better?

The expense ratio of VUG is 0.02 percentage points lower than IUSB’s (0.04% vs. 0.06%). VUG also has a high exposure to the technology sector while IUSB is mostly comprised of AAA bonds. Overall, VUG has provided higher returns than IUSB over the past ten years.

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

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Summary

VUGIUSB
NameVanguard Growth Index Fund ETF SharesiShares Core Total USD Bond Market ETF
CategoryLarge GrowthN/A
IssuerVanguardiShares
AUM165.53B14.49B
Avg. Return17.58%4.13%
Div. Yield0.57%2.1%
Expense Ratio0.04%0.06%

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 iShares Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.

VUG’s dividend yield is 1.53% lower than that of IUSB (0.57% vs. 2.1%). Also, VUG yielded on average 13.45% more per year over the past decade (17.58% vs. 4.13%). The expense ratio of VUG is 0.02 percentage points lower than IUSB’s (0.04% vs. 0.06%).

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Fund Composition

Holdings

VUG - Holdings

VUG HoldingsWeight
Apple Inc10.13%
Microsoft Corp9.52%
Amazon.com Inc6.88%
Facebook Inc Class A3.89%
Alphabet Inc Class A3.43%
Alphabet Inc Class C3.22%
Tesla Inc2.44%
NVIDIA Corp2.21%
Visa Inc Class A1.78%
PayPal Holdings Inc1.6%

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%.

IUSB - Holdings

IUSB Bond SectorsWeight
AAA58.32%
BBB16.98%
A12.27%
BB4.33%
AA3.36%
B2.8%
Others1.01%
Below B0.92%
US Government0.0%

IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.

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Risk Analysis

VUGIUSB
Mean Return1.440
R-squared92.480
Std. Deviation14.760
Alpha1.810
Beta1.040
Sharpe Ratio1.130
Treynor Ratio16.130

The Vanguard Growth Index Fund ETF Shares (VUG) has a Treynor Ratio of 16.13 with a Alpha of 1.81 and a Beta of 1.04. Its Sharpe Ratio is 1.13 while VUG’s Standard Deviation is 14.76. Furthermore, the fund has a R-squared of 92.48 and a Mean Return of 1.44.

The iShares Core Total USD Bond Market ETF (IUSB) has a Alpha of 0 with a R-squared of 0 and a Beta of 0. Its Mean Return is 0 while IUSB’s Sharpe Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a Treynor Ratio of 0.

VUG’s Mean Return is 1.44 points higher than that of IUSB and its R-squared is 92.48 points higher. With a Standard Deviation of 14.76, VUG is slightly more volatile than IUSB. The Alpha and Beta of VUG are 1.81 points higher and 1.04 points higher than IUSB’s Alpha and Beta.

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Performance

Annual Returns

VUG vs. IUSB - Annual Returns

YearVUGIUSB
202040.16%7.59%
201937.26%9.26%
2018-3.32%-0.38%
201727.8%4.06%
20166.13%3.78%
20153.32%0.46%
201413.62%0.0%
201332.38%0.0%
201217.03%0.0%
20111.87%0.0%
201017.11%0.0%

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 2019 was the strongest year for IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.

Portfolio Growth

VUG vs. IUSB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VUG$10,000$26,06517.58%
IUSB$10,000$12,7044.13%

A $10,000 investment in VUG would have resulted in a final balance of $26,065. This is a profit of $16,065 over 6 years and amounts to a compound annual growth rate (CAGR) of 17.58%.

With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.

VUG’s CAGR is 13.45 percentage points higher than that of IUSB and as a result, would have yielded $13,361 more on a $10,000 investment. Thus, VUG outperformed IUSB by 13.45% annually.


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