The Vanguard Large-Cap Index Fund ETF Shares (VV) and the iShares Preferred and Income Securities ETF (PFF) are both among the Top 100 ETFs. VV is a Vanguard Large Blend fund and PFF is a iShares Preferred Stock fund. So, what’s the difference between VV and PFF? And which fund is better?
The expense ratio of VV is 0.42 percentage points lower than PFF’s (0.04% vs. 0.46%). VV also has a higher exposure to the technology sector and a higher standard deviation. Overall, VV has provided higher returns than PFF over the past 11 years.
In this article, we’ll compare VV vs. PFF. We’ll look at annual returns and fund composition, as well as at their risk metrics and performance. Moreover, I’ll also discuss VV’s and PFF’s holdings, industry exposure, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Large-Cap Index Fund ETF Shares||iShares Preferred and Income Securities ETF|
|Category||Large Blend||Preferred Stock|
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 Preferred and Income Securities ETF (PFF) is a Preferred Stock fund that is issued by iShares. It currently has 19.8B total assets under management and has yielded an average annual return of 6.90% over the past 10 years. The fund has a dividend yield of 4.47% with an expense ratio of 0.46%.
VV’s dividend yield is 3.21% lower than that of PFF (1.26% vs. 4.47%). Also, VV yielded on average 7.85% more per year over the past decade (14.75% vs. 6.90%). The expense ratio of VV is 0.42 percentage points lower than PFF’s (0.04% vs. 0.46%).
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The Vanguard Large-Cap Index Fund ETF Shares (VV) has the most exposure to the Technology sector at 25.38%. This is followed by Financial Services and Healthcare at 13.82% and 13.22% respectively. Utilities (2.35%), Energy (2.62%), and Real Estate (2.7%) only make up 7.67% of the fund’s total assets.
VV’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Consumer Cyclical, Communication Services, and Healthcare stocks at 6.06%, 8.39%, 11.65%, 11.68%, and 13.22%.
The iShares Preferred and Income Securities ETF (PFF) has the most exposure to the Utilities sector at 81.81%. This is followed by Industrials and Basic Materials at 10.27% and 3.74% respectively. Financial Services (0.0%), Consumer Defensive (0.0%), and Communication Services (0.0%) only make up 0.00% of the fund’s total assets.
PFF’s mid-section with moderate exposure is comprised of Energy, Technology, Real Estate, Healthcare, and Basic Materials stocks at 0.0%, 0.0%, 0.65%, 3.54%, and 3.74%.
VV is 25.38% more exposed to the Technology sector than PFF (25.38% vs 0.0%). VV’s exposure to Financial Services and Healthcare stocks is 13.82% higher and 9.68% higher respectively (13.82% vs. 0.0% and 13.22% vs. 3.54%). In total, Utilities, Energy, and Real Estate also make up 74.79% less of the fund’s holdings compared to PFF (7.67% vs. 82.46%).
|Facebook Inc Class A||2.19%|
|Alphabet Inc Class A||1.93%|
|Alphabet Inc Class C||1.81%|
|Berkshire Hathaway Inc Class B||1.3%|
|JPMorgan Chase & Co||1.24%|
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%.
|Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A||2.54%|
|BlackRock Cash Funds Treasury SL Agency||2.3%|
|Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-||1.79%|
|Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-||1.49%|
|ArcelorMittal S.A. 5.5%||1.36%|
|Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A||1.35%|
|Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B||1.14%|
|NextEra Energy Inc Unit||1.12%|
|Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4||1.08%|
|Avantor Inc Ser A||0.99%|
PFF’s Top Holdings are Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A, BlackRock Cash Funds Treasury SL Agency, Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-, Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-, and ArcelorMittal S.A. 5.5% at 2.54%, 2.3%, 1.79%, 1.49%, and 1.36%.
Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A (1.35%), Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B (1.14%), and NextEra Energy Inc Unit (1.12%) have a slightly smaller but still significant weight. Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 and Avantor Inc Ser A are also represented in the PFF’s holdings at 1.08% and 0.99%.
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The Vanguard Large-Cap Index Fund ETF Shares (VV) has a Alpha of -0.08 with a R-squared of 99.86 and a Standard Deviation of 13.75. Its Sharpe Ratio is 1.04 while VV’s Mean Return is 1.24. Furthermore, the fund has a Treynor Ratio of 14.14 and a Beta of 1.01.
The iShares Preferred and Income Securities ETF (PFF) has a Alpha of 3.45 with a Standard Deviation of 7.87 and a Treynor Ratio of 6.79. Its Sharpe Ratio is 0.72 while PFF’s R-squared is 9.39. Furthermore, the fund has a Mean Return of 0.52 and a Beta of 0.81.
VV’s Mean Return is 0.72 points higher than that of PFF and its R-squared is 90.47 points higher. With a Standard Deviation of 13.75, VV is slightly more volatile than PFF. The Alpha and Beta of VV are 3.53 points lower and 0.20 points higher than PFF’s Alpha and Beta.
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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 2012 was the strongest year for PFF, returning 18.25% on an annual basis. The poorest year for PFF in the last ten years was 2018, with a yield of -4.77%. Most years the iShares Preferred and Income Securities ETF has given investors modest returns, such as in 2015, 2020, and 2017, when gains were 4.62%, 7.94%, and 8.33% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VV would have resulted in a final balance of $42,970. This is a profit of $32,970 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.75%.
With a $10,000 investment in PFF, the end total would have been $20,272. This equates to a $10,272 profit over 11 years and a compound annual growth rate (CAGR) of 6.90%.
VV’s CAGR is 7.85 percentage points higher than that of PFF and as a result, would have yielded $22,698 more on a $10,000 investment. Thus, VV outperformed PFF by 7.85% annually.
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