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VUG vs. VLUE: What’s The Difference?

The Vanguard Growth Index Fund ETF Shares (VUG) and the iShares MSCI USA Value Factor ETF (VLUE) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and VLUE is a iShares Large Value fund. So, what’s the difference between VUG and VLUE? And which fund is better?

The expense ratio of VUG is 0.11 percentage points lower than VLUE’s (0.04% vs. 0.15%). VUG also has a higher exposure to the technology sector and a higher standard deviation. Overall, VUG has provided higher returns than VLUE over the past ten years.

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

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Summary

VUGVLUE
NameVanguard Growth Index Fund ETF SharesiShares MSCI USA Value Factor ETF
CategoryLarge GrowthLarge Value
IssuerVanguardiShares
AUM165.53B15.95B
Avg. Return17.58%8.91%
Div. Yield0.57%1.89%
Expense Ratio0.04%0.15%

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 MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.

VUG’s dividend yield is 1.32% lower than that of VLUE (0.57% vs. 1.89%). Also, VUG yielded on average 8.67% more per year over the past decade (17.58% vs. 8.91%). The expense ratio of VUG is 0.11 percentage points lower than VLUE’s (0.04% vs. 0.15%).

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Fund Composition

Industry Exposure

VUG vs. VLUE - Industry Exposure

VUGVLUE
Technology39.05%26.89%
Industrials5.13%9.14%
Energy0.32%2.42%
Communication Services16.49%10.39%
Utilities0.0%2.68%
Healthcare8.09%14.31%
Consumer Defensive2.41%7.22%
Real Estate2.46%3.19%
Financial Services6.75%10.96%
Consumer Cyclical17.78%10.66%
Basic Materials1.52%2.14%

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 iShares MSCI USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.

VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.

VUG is 12.16% more exposed to the Technology sector than VLUE (39.05% vs 26.89%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 7.12% higher and 6.10% higher respectively (17.78% vs. 10.66% and 16.49% vs. 10.39%). In total, Energy, Basic Materials, and Consumer Defensive also make up 7.53% less of the fund’s holdings compared to VLUE (4.25% vs. 11.78%).

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%.

VLUE - Holdings

VLUE HoldingsWeight
AT&T Inc7.13%
Intel Corp6.14%
General Motors Co3.19%
Micron Technology Inc3.14%
Cisco Systems Inc3.05%
International Business Machines Corp2.76%
Target Corp2.38%
Citigroup Inc2.32%
Ford Motor Co2.23%
Pfizer Inc2.17%

VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.

International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.

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Risk Analysis

VUGVLUE
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 Alpha of 1.81 with a Standard Deviation of 14.76 and a Sharpe Ratio of 1.13. Its Beta is 1.04 while VUG’s Mean Return is 1.44. Furthermore, the fund has a Treynor Ratio of 16.13 and a R-squared of 92.48.

The iShares MSCI USA Value Factor ETF (VLUE) has a Alpha of 0 with a Mean Return of 0 and a R-squared of 0. Its Beta is 0 while VLUE’s Treynor Ratio is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Standard Deviation of 0.

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

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Performance

Annual Returns

VUG vs. VLUE - Annual Returns

YearVUGVLUE
202040.16%-0.32%
201937.26%27.47%
2018-3.32%-11.18%
201727.8%21.97%
20166.13%15.68%
20153.32%-3.54%
201413.62%12.29%
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 VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

VUG vs. VLUE - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VUG$10,000$29,61517.58%
VLUE$10,000$17,2478.91%

A $10,000 investment in VUG would have resulted in a final balance of $29,615. This is a profit of $19,615 over 7 years and amounts to a compound annual growth rate (CAGR) of 17.58%.

With a $10,000 investment in VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.

VUG’s CAGR is 8.67 percentage points higher than that of VLUE and as a result, would have yielded $12,368 more on a $10,000 investment. Thus, VUG outperformed VLUE by 8.67% annually.


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