Vanguard Domestic Equity Value/Growth ETFs: Low Cost And Stellar Performance

Includes: VBK, VBR, VOE, VOT, VTV, VUG
by: Jon R. Orcutt

The debate between ETFs and Mutual Funds and which is better to own will never end. This article is not meant to try and solve that argument, but rather is simply meant to point out the outstanding performance of Vanguard's domestic asset class ETFs. The fact is, over the last five years these ETFs have done an outstanding job versus the average mutual fund performance within each of their asset classes. With Vanguard continuing to lower expenses (the average expenses for the six ETFs I will be sharing with you is just over .11%) I feel Vanguard should be strongly considered when designing an asset allocation strategy.

Here are the returns as of the close on 7/2/12:



Domestic Large Cap Value YTD 1 Yr TR 3 Yr TR 5 Yr TR
Vanguard Value ETF (NYSEARCA:VTV) 8.16% 1.34% 57.88% -11.13%
Average Mutual Fund Category Performance 7.31% -0.56% 51.57% -11.87%
Domestic Mid Cap Value
Vanguard Mid-Cap Value ETF (NYSEARCA:VOE) 6.86% -2.01% 76.28% -0.98%
Average Mutual Fund Category Performance 7.18% -4.32% 62.63% -3.27%
Domestic Small Cap Value
Vanguard Small Cap Value ETF (NYSEARCA:VBR) 9.80% -1.25% 73.22% 1.77%
Average Mutual Fund Category Performance 7.50% -3.13% 65.91% -1.87%
Domestic Large Cap Growth
Vanguard Growth ETF (NYSEARCA:VUG) 11.10% 5.25% 66.97% 15.10%
Average Mutual Fund Category Performance 9.66% -0.40% 54.52% 2.09%
Domestic Mid-Cap Growth (NYSEARCA:VOT)
Vanguard Mid-Cap Growth ETF 8.28% -5.97% 75.52% 3.12%
Average Mutual Fund Category Performance 8.05% -5.64% 64.05% 1.46%
Domestic Small Cap Growth (NYSEARCA:VBK)
Vanguard Small Cap Growth ETF 10.60% -2.63% 82.66% 15.73%
Average Mutual Fund Category Performance 8.59% -5.62% 66.26% 0.26%

As you can see these domestic Vanguard ETFs have done an excellent job versus their peers in the mutual fund industry. In particular, the five year total return performance in large and small cap growth has been tremendous when compared to the average mutual fund in those asset classes. The debate will go on and on, and yes there are many mutual funds that easily outperformed their category average performance as well, but when it comes to cost and performance, Vanguard needs to be part of the discussion when designing an asset allocation model.

Disclosure: I am long VBR, VUG, VBK.

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