The Vanguard Growth Index Fund ETF Shares (VUG) and the SPDR S&P Dividend ETF (SDY) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and SDY is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between VUG and SDY? And which fund is better?
The expense ratio of VUG is 0.31 percentage points lower than SDY’s (0.04% vs. 0.35%). VUG also has a higher exposure to the technology sector and a higher standard deviation. Overall, VUG has provided higher returns than SDY over the past ten years.
In this article, we’ll compare VUG vs. SDY. We’ll look at industry exposure and fund composition, as well as at their holdings and portfolio growth. Moreover, I’ll also discuss VUG’s and SDY’s performance, risk metrics, and annual returns and examine how these affect their overall returns.
|Name||Vanguard Growth Index Fund ETF Shares||SPDR S&P Dividend ETF|
|Category||Large Growth||Large Value|
|Issuer||Vanguard||SPDR State Street Global Advisors|
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 SPDR S&P Dividend ETF (SDY) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 19.67B total assets under management and has yielded an average annual return of 12.44% over the past 10 years. The fund has a dividend yield of 2.65% with an expense ratio of 0.35%.
VUG’s dividend yield is 2.08% lower than that of SDY (0.57% vs. 2.65%). Also, VUG yielded on average 5.14% more per year over the past decade (17.58% vs. 12.44%). The expense ratio of VUG is 0.31 percentage points lower than SDY’s (0.04% vs. 0.35%).
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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%.
The SPDR S&P Dividend ETF (SDY) has the most exposure to the Financial Services sector at 16.32%. This is followed by Industrials and Consumer Defensive at 15.89% and 14.01% respectively. Communication Services (4.64%), Energy (5.95%), and Basic Materials (6.45%) only make up 17.04% of the fund’s total assets.
SDY’s mid-section with moderate exposure is comprised of Real Estate, Healthcare, Consumer Cyclical, Utilities, and Consumer Defensive stocks at 6.57%, 7.35%, 8.68%, 12.14%, and 14.01%.
VUG is 37.05% more exposed to the Technology sector than SDY (39.05% vs 2.0%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 9.10% higher and 11.85% higher respectively (17.78% vs. 8.68% and 16.49% vs. 4.64%). In total, Energy, Basic Materials, and Consumer Defensive also make up 22.16% less of the fund’s holdings compared to SDY (4.25% vs. 26.41%).
|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%.
|Exxon Mobil Corp||2.81%|
|South Jersey Industries Inc||2.22%|
|International Business Machines Corp||2.0%|
|National Retail Properties Inc||1.86%|
|Federal Realty Investment Trust||1.77%|
|Realty Income Corp||1.7%|
|Old Republic International Corp||1.65%|
SDY’s Top Holdings are Exxon Mobil Corp, AT&T Inc, South Jersey Industries Inc, Chevron Corp, and International Business Machines Corp at 2.81%, 2.5%, 2.22%, 2.02%, and 2.0%.
AbbVie Inc (1.93%), National Retail Properties Inc (1.86%), and Federal Realty Investment Trust (1.77%) have a slightly smaller but still significant weight. Realty Income Corp and Old Republic International Corp are also represented in the SDY’s holdings at 1.7% and 1.65%.
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The Vanguard Growth Index Fund ETF Shares (VUG) has a Treynor Ratio of 16.13 with a Beta of 1.04 and a R-squared of 92.48. Its Alpha is 1.81 while VUG’s Mean Return is 1.44. Furthermore, the fund has a Standard Deviation of 14.76 and a Sharpe Ratio of 1.13.
The SPDR S&P Dividend ETF (SDY) has a Alpha of -0.1 with a R-squared of 83.62 and a Standard Deviation of 12.9. Its Mean Return is 1.07 while SDY’s Beta is 0.87. Furthermore, the fund has a Sharpe Ratio of 0.95 and a Treynor Ratio of 13.94.
VUG’s Mean Return is 0.37 points higher than that of SDY and its R-squared is 8.86 points higher. With a Standard Deviation of 14.76, VUG is slightly more volatile than SDY. The Alpha and Beta of VUG are 1.91 points higher and 0.17 points higher than SDY’s Alpha and Beta.
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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 2013 was the strongest year for SDY, returning 30.09% on an annual basis. The poorest year for SDY in the last ten years was 2018, with a yield of -2.73%. Most years the SPDR S&P Dividend ETF has given investors modest returns, such as in 2012, 2014, and 2017, when gains were 11.51%, 13.8%, and 15.84% 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 SDY, the end total would have been $34,806. This equates to a $24,806 profit over 11 years and a compound annual growth rate (CAGR) of 12.44%.
VUG’s CAGR is 5.14 percentage points higher than that of SDY and as a result, would have yielded $19,929 more on a $10,000 investment. Thus, VUG outperformed SDY by 5.14% annually.
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