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VV vs. QUAL: What’s The Difference?

The Vanguard Large-Cap Index Fund ETF Shares (VV) and the iShares MSCI USA Quality Factor ETF (QUAL) are both among the Top 100 ETFs. VV is a Vanguard Large Blend fund and QUAL is a iShares Large Blend fund. So, what’s the difference between VV and QUAL? And which fund is better?

The expense ratio of VV is 0.11 percentage points lower than QUAL’s (0.04% vs. 0.15%). VV also has a higher exposure to the technology sector and a higher standard deviation. Overall, VV has provided higher returns than QUAL over the past 7 years.

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

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Summary

VVQUAL
NameVanguard Large-Cap Index Fund ETF SharesiShares MSCI USA Quality Factor ETF
CategoryLarge BlendLarge Blend
IssuerVanguardiShares
AUM37.65B23.93B
Avg. Return14.75%13.42%
Div. Yield1.26%1.29%
Expense Ratio0.04%0.15%

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 MSCI USA Quality Factor ETF (QUAL) is a Large Blend fund that is issued by iShares. It currently has 23.93B total assets under management and has yielded an average annual return of 13.42% over the past 10 years. The fund has a dividend yield of 1.29% with an expense ratio of 0.15%.

VV’s dividend yield is 0.03% lower than that of QUAL (1.26% vs. 1.29%). Also, VV yielded on average 1.32% more per year over the past decade (14.75% vs. 13.42%). The expense ratio of VV is 0.11 percentage points lower than QUAL’s (0.04% vs. 0.15%).

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Fund Composition

Industry Exposure

VV vs. QUAL - Industry Exposure

VVQUAL
Technology25.38%22.52%
Industrials8.39%9.22%
Energy2.62%2.24%
Communication Services11.68%11.44%
Utilities2.35%2.41%
Healthcare13.22%13.22%
Consumer Defensive6.06%8.57%
Real Estate2.7%2.72%
Financial Services13.82%15.87%
Consumer Cyclical11.65%9.43%
Basic Materials2.13%2.35%

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 MSCI USA Quality Factor ETF (QUAL) has the most exposure to the Technology sector at 22.52%. This is followed by Financial Services and Healthcare at 15.87% and 13.22% respectively. Basic Materials (2.35%), Utilities (2.41%), and Real Estate (2.72%) only make up 7.48% of the fund’s total assets.

QUAL’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Consumer Cyclical, Communication Services, and Healthcare stocks at 8.57%, 9.22%, 9.43%, 11.44%, and 13.22%.

VV is 2.86% more exposed to the Technology sector than QUAL (25.38% vs 22.52%). VV’s exposure to Financial Services and Healthcare stocks is 2.05% lower and 0.00% lower respectively (13.82% vs. 15.87% and 13.22% vs. 13.22%). In total, Utilities, Energy, and Real Estate also make up 0.30% more of the fund’s holdings compared to QUAL (7.67% vs. 7.37%).

Holdings

VV - Holdings

VV HoldingsWeight
Apple Inc5.7%
Microsoft Corp5.35%
Amazon.com Inc3.87%
Facebook Inc Class A2.19%
Alphabet Inc Class A1.93%
Alphabet Inc Class C1.81%
Tesla Inc1.37%
Berkshire Hathaway Inc Class B1.3%
NVIDIA Corp1.24%
JPMorgan Chase & Co1.24%

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%.

QUAL - Holdings

QUAL HoldingsWeight
Facebook Inc Class A4.77%
Nike Inc Class B4.05%
Microsoft Corp3.54%
Apple Inc3.52%
Johnson & Johnson2.99%
BlackRock Inc2.87%
Target Corp2.8%
Mastercard Inc Class A2.72%
NVIDIA Corp2.71%
Alphabet Inc Class A2.49%

QUAL’s Top Holdings are Facebook Inc Class A, Nike Inc Class B, Microsoft Corp, Apple Inc, and Johnson & Johnson at 4.77%, 4.05%, 3.54%, 3.52%, and 2.99%.

BlackRock Inc (2.87%), Target Corp (2.8%), and Mastercard Inc Class A (2.72%) have a slightly smaller but still significant weight. NVIDIA Corp and Alphabet Inc Class A are also represented in the QUAL’s holdings at 2.71% and 2.49%.

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Risk Analysis

VVQUAL
Mean Return1.240
R-squared99.860
Std. Deviation13.750
Alpha-0.080
Beta1.010
Sharpe Ratio1.040
Treynor Ratio14.140

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

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

VV’s Mean Return is 1.24 points higher than that of QUAL and its R-squared is 99.86 points higher. With a Standard Deviation of 13.75, VV is slightly more volatile than QUAL. The Alpha and Beta of VV are 0.08 points lower and 1.01 points higher than QUAL’s Alpha and Beta.

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Performance

Annual Returns

VV vs. QUAL - Annual Returns

YearVVQUAL
202020.99%16.96%
201931.39%34.14%
2018-4.44%-5.77%
201722.03%22.26%
201611.65%9.18%
20151.07%5.56%
201413.39%11.62%
201332.65%0.0%
201216.09%0.0%
20111.58%0.0%
201015.81%0.0%

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 2019 was the strongest year for QUAL, returning 34.14% on an annual basis. The poorest year for QUAL in the last ten years was 2018, with a yield of -5.77%. Most years the iShares MSCI USA Quality Factor ETF has given investors modest returns, such as in 2010, 2015, and 2016, when gains were 0.0%, 5.56%, and 9.18% respectively.

Portfolio Growth

VV vs. QUAL - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VV$10,000$23,71914.75%
QUAL$10,000$23,25113.42%

A $10,000 investment in VV would have resulted in a final balance of $23,719. This is a profit of $13,719 over 7 years and amounts to a compound annual growth rate (CAGR) of 14.75%.

With a $10,000 investment in QUAL, the end total would have been $23,251. This equates to a $13,251 profit over 7 years and a compound annual growth rate (CAGR) of 13.42%.

VV’s CAGR is 1.32 percentage points higher than that of QUAL and as a result, would have yielded $468 more on a $10,000 investment. Thus, VV outperformed QUAL by 1.32% annually.


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