ACWI vs. VBK: What’s The Difference?

The iShares MSCI ACWI ETF (ACWI) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. ACWI is a iShares N/A fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between ACWI and VBK? And which fund is better?

The expense ratio of ACWI is 0.25 percentage points higher than VBK’s (0.32% vs. 0.07%). ACWI also has a lower exposure to the technology sector and a lower standard deviation. Overall, ACWI has provided lower returns than VBK over the past 11 years.

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

Summary

ACWI VBK
Name iShares MSCI ACWI ETF Vanguard Small-Cap Growth Index Fund ETF Shares
Category N/A Small Growth
Issuer iShares Vanguard
AUM 16.85B 37.89B
Avg. Return 10.21% 16.53%
Div. Yield 1.39% 0.45%
Expense Ratio 0.32% 0.07%

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.

ACWI’s dividend yield is 0.94% higher than that of VBK (1.39% vs. 0.45%). Also, ACWI yielded on average 6.31% less per year over the past decade (10.21% vs. 16.53%). The expense ratio of ACWI is 0.25 percentage points higher than VBK’s (0.32% vs. 0.07%).

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Fund Composition

Industry Exposure

ACWI vs. VBK - Industry Exposure

ACWI VBK
Technology 20.41% 27.87%
Industrials 9.65% 13.19%
Energy 3.48% 1.77%
Communication Services 9.87% 3.24%
Utilities 2.61% 0.32%
Healthcare 11.74% 23.24%
Consumer Defensive 7.15% 3.83%
Real Estate 2.75% 7.87%
Financial Services 15.58% 4.05%
Consumer Cyclical 12.01% 12.13%
Basic Materials 4.73% 2.49%

The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.

ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.

VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.

ACWI is 7.46% less exposed to the Technology sector than VBK (20.41% vs 27.87%). ACWI’s exposure to Financial Services and Consumer Cyclical stocks is 11.53% higher and 0.12% lower respectively (15.58% vs. 4.05% and 12.01% vs. 12.13%). In total, Real Estate, Energy, and Basic Materials also make up 1.17% less of the fund’s holdings compared to VBK (10.96% vs. 12.13%).

Holdings

ACWI - Holdings

ACWI Holdings Weight
Apple Inc 3.44%
Microsoft Corp 2.91%
Amazon.com Inc 2.21%
Facebook Inc A 1.25%
Alphabet Inc Class C 1.12%
Alphabet Inc A 1.09%
Taiwan Semiconductor Manufacturing Co Ltd 0.79%
Tesla Inc 0.78%
NVIDIA Corp 0.74%
JPMorgan Chase & Co 0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

VBK - Holdings

VBK Holdings Weight
Charles River Laboratories International Inc 0.78%
Pool Corp 0.73%
Bio-Techne Corp 0.73%
Avantor Inc 0.73%
PerkinElmer Inc 0.72%
Entegris Inc 0.7%
PTC Inc 0.62%
Fair Isaac Corp 0.57%
Bill.com Holdings Inc Ordinary Shares 0.56%
Avalara Inc 0.55%

VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.

Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.

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Risk Analysis

ACWI VBK
Mean Return 0.89 1.22
R-squared 99.96 80.56
Std. Deviation 14.05 17.95
Alpha 0.15 -2.81
Beta 1 1.18
Sharpe Ratio 0.71 0.78
Treynor Ratio 9.45 11.18

The iShares MSCI ACWI ETF (ACWI) has a Sharpe Ratio of 0.71 with a Beta of 1 and a Treynor Ratio of 9.45. Its Standard Deviation is 14.05 while ACWI’s Mean Return is 0.89. Furthermore, the fund has a R-squared of 99.96 and a Alpha of 0.15.

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Beta of 1.18 with a Sharpe Ratio of 0.78 and a Standard Deviation of 17.95. Its Treynor Ratio is 11.18 while VBK’s Alpha is -2.81. Furthermore, the fund has a Mean Return of 1.22 and a R-squared of 80.56.

ACWI’s Mean Return is 0.33 points lower than that of VBK and its R-squared is 19.40 points higher. With a Standard Deviation of 14.05, ACWI is slightly less volatile than VBK. The Alpha and Beta of ACWI are 2.96 points higher and 0.18 points lower than VBK’s Alpha and Beta.

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Performance

Annual Returns

ACWI vs. VBK - Annual Returns

Year ACWI VBK
2020 16.38% 35.29%
2019 26.7% 32.75%
2018 -9.15% -5.68%
2017 24.35% 21.9%
2016 8.22% 10.74%
2015 -2.39% -2.51%
2014 4.64% 4.02%
2013 22.91% 38.18%
2012 15.99% 17.67%
2011 -7.6% -1.43%
2010 12.31% 30.87%

ACWI had its best year in 2019 with an annual return of 26.7%. ACWI’s worst year over the past decade yielded -9.15% and occurred in 2018. In most years the iShares MSCI ACWI ETF provided moderate returns such as in 2016, 2010, and 2012 where annual returns amounted to 8.22%, 12.31%, and 15.99% respectively.

The year 2013 was the strongest year for VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.

Portfolio Growth

ACWI vs. VBK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
ACWI $10,000 $27,241 10.21%
VBK $10,000 $48,639 16.53%

A $10,000 investment in ACWI would have resulted in a final balance of $27,241. This is a profit of $17,241 over 11 years and amounts to a compound annual growth rate (CAGR) of 10.21%.

With a $10,000 investment in VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.

ACWI’s CAGR is 6.31 percentage points lower than that of VBK and as a result, would have yielded $21,398 less on a $10,000 investment. Thus, ACWI performed worse than VBK by 6.31% annually.


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