The Vanguard Large-Cap Index Fund ETF Shares (VV) and the iShares 1-3 Year Treasury Bond ETF (SHY) are both among the Top 100 ETFs. VV is a Vanguard Large Blend fund and SHY is a iShares Short Government fund. So, what’s the difference between VV and SHY? And which fund is better?
The expense ratio of VV is 0.11 percentage points lower than SHY’s (0.04% vs. 0.15%). VV also has a high exposure to the technology sector while SHY is mostly comprised of AAA bonds. Overall, VV has provided higher returns than SHY over the past 11 years.
In this article, we’ll compare VV vs. SHY. We’ll look at industry exposure and performance, as well as at their fund composition and portfolio growth. Moreover, I’ll also discuss VV’s and SHY’s annual returns, risk metrics, and holdings and examine how these affect their overall returns.
|Name||Vanguard Large-Cap Index Fund ETF Shares||iShares 1-3 Year Treasury Bond ETF|
|Category||Large Blend||Short Government|
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 1-3 Year Treasury Bond ETF (SHY) is a Short Government fund that is issued by iShares. It currently has 19.51B total assets under management and has yielded an average annual return of 1.27% over the past 10 years. The fund has a dividend yield of 0.46% with an expense ratio of 0.15%.
VV’s dividend yield is 0.80% higher than that of SHY (1.26% vs. 0.46%). Also, VV yielded on average 13.47% more per year over the past decade (14.75% vs. 1.27%). The expense ratio of VV is 0.11 percentage points lower than SHY’s (0.04% vs. 0.15%).
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|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%.
|SHY Bond Sectors||Weight|
SHY’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.67%, 0.33%, 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.
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The Vanguard Large-Cap Index Fund ETF Shares (VV) has a Beta of 1.01 with a Sharpe Ratio of 1.04 and a Mean Return of 1.24. Its Treynor Ratio is 14.14 while VV’s R-squared is 99.86. Furthermore, the fund has a Alpha of -0.08 and a Standard Deviation of 13.75.
The iShares 1-3 Year Treasury Bond ETF (SHY) has a Mean Return of 0.09 with a Treynor Ratio of 2.6 and a Standard Deviation of 0.89. Its Beta is 0.18 while SHY’s Sharpe Ratio is 0.54. Furthermore, the fund has a R-squared of 39.11 and a Alpha of -0.03.
VV’s Mean Return is 1.15 points higher than that of SHY and its R-squared is 60.75 points higher. With a Standard Deviation of 13.75, VV is slightly more volatile than SHY. The Alpha and Beta of VV are 0.05 points lower and 0.83 points higher than SHY’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 2019 was the strongest year for SHY, returning 3.42% on an annual basis. The poorest year for SHY in the last ten years was 2013, with a yield of 0.23%. Most years the iShares 1-3 Year Treasury Bond ETF has given investors modest returns, such as in 2014, 2016, and 2011, when gains were 0.48%, 0.75%, and 1.43% 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 SHY, the end total would have been $11,486. This equates to a $1,486 profit over 11 years and a compound annual growth rate (CAGR) of 1.27%.
VV’s CAGR is 13.47 percentage points higher than that of SHY and as a result, would have yielded $31,484 more on a $10,000 investment. Thus, VV outperformed SHY by 13.47% annually.
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