VXF vs. IEF: What’s The Difference?

The Vanguard Extended Market Index Fund ETF Shares (VXF) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. VXF is a Vanguard Mid-Cap Growth fund and IEF is a iShares Long Government fund. So, what’s the difference between VXF and IEF? And which fund is better?

The expense ratio of VXF is 0.09 percentage points lower than IEF’s (0.06% vs. 0.15%). VXF also has a high exposure to the technology sector while IEF is mostly comprised of AAA bonds. Overall, VXF has provided higher returns than IEF over the past 11 years.

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

Summary

VXF IEF
Name Vanguard Extended Market Index Fund ETF Shares iShares 7-10 Year Treasury Bond ETF
Category Mid-Cap Growth Long Government
Issuer Vanguard iShares
AUM 114.53B 13.44B
Avg. Return 15.47% 5.06%
Div. Yield 1.19% 0.84%
Expense Ratio 0.06% 0.15%

The Vanguard Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.

The iShares 7-10 Year Treasury Bond ETF (IEF) is a Long Government fund that is issued by iShares. It currently has 13.44B total assets under management and has yielded an average annual return of 5.06% over the past 10 years. The fund has a dividend yield of 0.84% with an expense ratio of 0.15%.

VXF’s dividend yield is 0.35% higher than that of IEF (1.19% vs. 0.84%). Also, VXF yielded on average 10.41% more per year over the past decade (15.47% vs. 5.06%). The expense ratio of VXF is 0.09 percentage points lower than IEF’s (0.06% vs. 0.15%).

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Fund Composition

Holdings

VXF - Holdings

VXF Holdings Weight
Square Inc A 1.2%
Zoom Video Communications Inc 1.04%
Uber Technologies Inc 0.93%
Moderna Inc 0.9%
Blackstone Group Inc 0.83%
Snap Inc Class A 0.8%
Twilio Inc A 0.73%
DocuSign Inc 0.68%
CrowdStrike Holdings Inc Class A 0.63%
Marvell Technology Inc 0.6%

VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.

Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.

IEF - Holdings

IEF Bond Sectors Weight
AAA 100.0%
Others 0.0%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

IEF’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.

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Risk Analysis

VXF IEF
Mean Return 1.24 0.32
R-squared 85.73 77.56
Std. Deviation 18.04 5.42
Alpha -3.26 -1.2
Beta 1.23 1.59
Sharpe Ratio 0.79 0.6
Treynor Ratio 10.92 1.97

The Vanguard Extended Market Index Fund ETF Shares (VXF) has a Treynor Ratio of 10.92 with a Standard Deviation of 18.04 and a Mean Return of 1.24. Its R-squared is 85.73 while VXF’s Beta is 1.23. Furthermore, the fund has a Sharpe Ratio of 0.79 and a Alpha of -3.26.

The iShares 7-10 Year Treasury Bond ETF (IEF) has a Sharpe Ratio of 0.6 with a R-squared of 77.56 and a Mean Return of 0.32. Its Standard Deviation is 5.42 while IEF’s Alpha is -1.2. Furthermore, the fund has a Treynor Ratio of 1.97 and a Beta of 1.59.

VXF’s Mean Return is 0.92 points higher than that of IEF and its R-squared is 8.17 points higher. With a Standard Deviation of 18.04, VXF is slightly more volatile than IEF. The Alpha and Beta of VXF are 2.06 points lower and 0.36 points lower than IEF’s Alpha and Beta.

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Performance

Annual Returns

VXF vs. IEF - Annual Returns

Year VXF IEF
2020 32.19% 9.84%
2019 28.04% 8.38%
2018 -9.37% 0.82%
2017 18.1% 2.47%
2016 16.16% 1.0%
2015 -3.26% 1.55%
2014 7.55% 8.92%
2013 38.37% -6.12%
2012 18.48% 4.06%
2011 -3.61% 15.46%
2010 27.55% 9.29%

VXF had its best year in 2013 with an annual return of 38.37%. VXF’s worst year over the past decade yielded -9.37% and occurred in 2018. In most years the Vanguard Extended Market Index Fund ETF Shares provided moderate returns such as in 2016, 2017, and 2012 where annual returns amounted to 16.16%, 18.1%, and 18.48% respectively.

The year 2011 was the strongest year for IEF, returning 15.46% on an annual basis. The poorest year for IEF in the last ten years was 2013, with a yield of -6.12%. Most years the iShares 7-10 Year Treasury Bond ETF has given investors modest returns, such as in 2017, 2012, and 2019, when gains were 2.47%, 4.06%, and 8.38% respectively.

Portfolio Growth

VXF vs. IEF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VXF $10,000 $44,130 15.47%
IEF $10,000 $16,936 5.06%

A $10,000 investment in VXF would have resulted in a final balance of $44,130. This is a profit of $34,130 over 11 years and amounts to a compound annual growth rate (CAGR) of 15.47%.

With a $10,000 investment in IEF, the end total would have been $16,936. This equates to a $6,936 profit over 11 years and a compound annual growth rate (CAGR) of 5.06%.

VXF’s CAGR is 10.41 percentage points higher than that of IEF and as a result, would have yielded $27,194 more on a $10,000 investment. Thus, VXF outperformed IEF by 10.41% annually.


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