VV vs. GOVT: What’s The Difference?

The Vanguard Large-Cap Index Fund ETF Shares (VV) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. VV is a Vanguard Large Blend fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between VV and GOVT? And which fund is better?

The expense ratio of VV is 0.01 percentage points lower than GOVT’s (0.04% vs. 0.05%). VV also has a high exposure to the technology sector while GOVT is mostly comprised of AAA bonds. Overall, VV has provided higher returns than GOVT over the past 8 years.

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

Summary

The Vanguard Large-Cap Index Fund ETF Shares (VV) is a Large Blend fund that is issued by Vanguard. It currently has 37.65B total assets under management and has yielded an average annual return of 14.75% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.04%.

The iShares U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.

Fund Composition

Holdings

VV’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.7%, 5.35%, 3.87%, 2.19%, and 1.93%.

Alphabet Inc Class C (1.81%), Tesla Inc (1.37%), and Berkshire Hathaway Inc Class B (1.3%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VV’s holdings at 1.24% and 1.24%.

GOVT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.

Risk Analysis

The Vanguard Large-Cap Index Fund ETF Shares (VV) has a Treynor Ratio of 14.14 with a Beta of 1.01 and a R-squared of 99.86. Its Mean Return is 1.24 while VV’s Alpha is -0.08. Furthermore, the fund has a Standard Deviation of 13.75 and a Sharpe Ratio of 1.04.

The iShares U.S. Treasury Bond ETF (GOVT) has a Standard Deviation of 0 with a Mean Return of 0 and a Sharpe Ratio of 0. Its R-squared is 0 while GOVT’s Beta is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Alpha of 0.

Performance

Annual Returns

VV had its best year in 2013 with an annual return of 32.65%. VV’s worst year over the past decade yielded -4.44% and occurred in 2018. In most years the Vanguard Large-Cap Index Fund ETF Shares provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.39%, 15.81%, and 16.09% respectively.

The year 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.

Portfolio Growth

A $10,000 investment in VV would have resulted in a final balance of $31,464. This is a profit of $21,464 over 8 years and amounts to a compound annual growth rate (CAGR) of 14.75%.

With a $10,000 investment in GOVT, the end total would have been $12,297. This equates to a $2,297 profit over 8 years and a compound annual growth rate (CAGR) of 2.67%.

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Marvin Allen

Hi! My name is Marvin. I am on a path toward financial freedom.

I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.

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