Better than the S&P 500? |Which ETF? | Vanguard vs iShares

Is the iShares ETF I’m investing in better than Vanguards S&P500?

I have a Self Invested Personal Pension and I recently shared that I’m paying into it on a monthly basis (dollar cost averaging or pound cost averaging, if you’re in the UK). The ETF/ index fund I’m choosing to add to my investment Portfolio is SUUS (iShares MSCI USA SRI UCITS ETF).

In today’s video we are going to compare the performance of this ETF with the US Large Blend Equity and also with the S&P 500. First and foremost we are going to talk through performance, the main differences with the S&P 500 and why I’m choosing to invest, and then we’ll move onto other key factors including fees, portfolio and risk.

Performance

SUUS 5year annualised performance 14.49%
Vs
VUSA Vanguard’s S&P500 5 year annualised performance 12.89%

SUUS was established back in 2016 whereas Vanguard’s VUSA was established in 2012. So although past results are not indicative of future performance you do have an extra 4 years of past results to take in. Obviously the S&P500 dates back further than that and was established in 1923 where the index covered 233 companies and was introduced in its current form in 1957 when it was expanded to include the top 500 companies. So if you’re looking for a well established index then arguably the S&P500 might be the one for you.

If you had invested £1k into this ETF 10 years ago you’d be looking at a current investment pot of £2746, whereas, if you’d invested it into the US large cap you’d be looking at £2153, that’s almost £600 more, if you’d invested in SUUS.

So what’s the big difference between the two index funds?

The iShares ETF gives you access to the US market but the companies are ESG screened. ESG stands for Environmental, Social and Governance. This basically means that it screens out companies involved in industries like weapons, tobacco, firearms, alcohol, and gambling for example. The companies also have enhanced environmental credentials and there’s further screens on things like Thermal Coal, Oil Sands, and Oil and Gas.

Once the screening is complete you are left with an overall portfolio size of 167 holdings of which the top 5 are Tesla, Microsoft, The Home Depot, Adobe and Coca Cola. Obviously with the S&P 500 you have 500 (currently 506) different companies, of which the top 5 are Microsoft, Apple, Amazon, Nvidia, and Alphabet. So if you’re looking for a more diverse US index fund then obviously the S&P500 has a far larger number of holdings.

Fees

iShares SUUS 0.20%
Vanguard VUSA 0.07%

Risk
Synthetic Risk and Reward Indicator
Both at a level of 6 - can go all the way from 1-7. 1 being the lowest level of risk and potentially lower returns and 7 being the highest level of risk and highest returns.

Then look at standard deviation as an indicator. If we look at 5 years:

SUUS 14.22
VUSA 13.78

The lower the standard deviation the better if all else is the same. So in terms of risk level the VUSA ETF is favourable as it has a lower standard deviation. Standard deviation gives a good idea of the variability of annual returns. The lower the standard deviation the more predictable an investment is. Investing Qualifications I hold:

International Certificate in Wealth and Investment Management (Chartered Institute for Securities & Investment)

**Books I've Enjoyed**

How to Own the World by Andrew Craig: https://amzn.to/3yx1GpY
The Psychology of Money by Morgan Housel: https://amzn.to/3dzdAa3
The Warren Buffett Way by Robert Hagstrom JR: https://amzn.to/3xnWumF
Naked Trader by Robbie Burns: https://amzn.to/3fDRAfj
The Little Book of Common Sense Investing by John Bogle: https://amzn.to/3rylk3U

I make videos on investing, personal finance, growing wealth, financial independence, budgeting and saving money. Let me know in the comments what you’d like to see next!

DISCLAIMER

Any information given in this video is for entertainment purposes only, and does not act as legal or financial advice. Your financial decisions are your own responsibility, and if you do require advice please contact a qualified Financial Adviser, Wealth Manager or Financial Planner.