VUG vs. VBR: What’s The Difference?

The Vanguard Growth Index Fund ETF Shares (VUG) and the Vanguard Small-Cap Value Index Fund ETF Shares (VBR) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and VBR is a Vanguard Small Value fund. So, what’s the difference between VUG and VBR? And which fund is better?

The expense ratio of VUG is 0.03 percentage points lower than VBR’s (0.04% vs. 0.07%). VUG also has a higher exposure to the technology sector and a lower standard deviation. Overall, VUG has provided higher returns than VBR over the past ten years.

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

Summary

VUG VBR
Name Vanguard Growth Index Fund ETF Shares Vanguard Small-Cap Value Index Fund ETF Shares
Category Large Growth Small Value
Issuer Vanguard Vanguard
AUM 165.53B 48.08B
Avg. Return 17.58% 12.28%
Div. Yield 0.57% 1.6%
Expense Ratio 0.04% 0.07%

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 Small-Cap Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.

VUG’s dividend yield is 1.03% lower than that of VBR (0.57% vs. 1.6%). Also, VUG yielded on average 5.30% more per year over the past decade (17.58% vs. 12.28%). The expense ratio of VUG is 0.03 percentage points lower than VBR’s (0.04% vs. 0.07%).

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Fund Composition

Industry Exposure

VUG vs. VBR - Industry Exposure

VUG VBR
Technology 39.05% 8.39%
Industrials 5.13% 18.44%
Energy 0.32% 5.15%
Communication Services 16.49% 1.77%
Utilities 0.0% 3.65%
Healthcare 8.09% 7.16%
Consumer Defensive 2.41% 4.36%
Real Estate 2.46% 10.92%
Financial Services 6.75% 20.04%
Consumer Cyclical 17.78% 13.82%
Basic Materials 1.52% 6.31%

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 Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.

VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.

VUG is 30.66% more exposed to the Technology sector than VBR (39.05% vs 8.39%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 3.96% higher and 14.72% higher respectively (17.78% vs. 13.82% and 16.49% vs. 1.77%). In total, Energy, Basic Materials, and Consumer Defensive also make up 11.57% less of the fund’s holdings compared to VBR (4.25% vs. 15.82%).

Holdings

VUG - Holdings

VUG Holdings Weight
Apple Inc 10.13%
Microsoft Corp 9.52%
Amazon.com Inc 6.88%
Facebook Inc Class A 3.89%
Alphabet Inc Class A 3.43%
Alphabet Inc Class C 3.22%
Tesla Inc 2.44%
NVIDIA Corp 2.21%
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%.

VBR - Holdings

VBR Holdings Weight
Diamondback Energy Inc 0.55%
VICI Properties Inc Ordinary Shares 0.54%
IDEX Corp 0.54%
Nuance Communications Inc 0.5%
Molina Healthcare Inc 0.48%
Signature Bank 0.46%
Novavax Inc 0.44%
Howmet Aerospace Inc 0.44%
Apollo Global Management Inc Class A 0.42%
Brown & Brown Inc 0.41%

VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.

Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.

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Risk Analysis

VUG VBR
Mean Return 1.44 1.08
R-squared 92.48 82.2
Std. Deviation 14.76 18.37
Alpha 1.81 -5.09
Beta 1.04 1.23
Sharpe Ratio 1.13 0.67
Treynor Ratio 16.13 9.15

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

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Standard Deviation of 18.37 with a R-squared of 82.2 and a Sharpe Ratio of 0.67. Its Alpha is -5.09 while VBR’s Treynor Ratio is 9.15. Furthermore, the fund has a Beta of 1.23 and a Mean Return of 1.08.

VUG’s Mean Return is 0.36 points higher than that of VBR and its R-squared is 10.28 points higher. With a Standard Deviation of 14.76, VUG is slightly less volatile than VBR. The Alpha and Beta of VUG are 6.90 points higher and 0.19 points lower than VBR’s Alpha and Beta.

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Performance

Annual Returns

VUG vs. VBR - Annual Returns

Year VUG VBR
2020 40.16% 5.82%
2019 37.26% 22.76%
2018 -3.32% -12.22%
2017 27.8% 11.79%
2016 6.13% 24.8%
2015 3.32% -4.67%
2014 13.62% 10.55%
2013 32.38% 36.57%
2012 17.03% 18.78%
2011 1.87% -4.05%
2010 17.11% 24.97%

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 VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% respectively.

Portfolio Growth

VUG vs. VBR - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VUG $10,000 $54,735 17.58%
VBR $10,000 $32,611 12.28%

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 VBR, the end total would have been $32,611. This equates to a $22,611 profit over 11 years and a compound annual growth rate (CAGR) of 12.28%.

VUG’s CAGR is 5.30 percentage points higher than that of VBR and as a result, would have yielded $22,124 more on a $10,000 investment. Thus, VUG outperformed VBR by 5.30% annually.


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