The iShares Core Dividend Growth ETF (DGRO) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. DGRO is a iShares Large Value fund and IWN is a iShares Small Value fund. So, what’s the difference between DGRO and IWN? And which fund is better?
The expense ratio of DGRO is 0.16 percentage points lower than IWN’s (0.08% vs. 0.24%). DGRO also has a higher exposure to the technology sector and a lower standard deviation. Overall, DGRO has provided higher returns than IWN over the past 6 years.
In this article, we’ll compare DGRO vs. IWN. We’ll look at fund composition and industry exposure, as well as at their performance and risk metrics. Moreover, I’ll also discuss DGRO’s and IWN’s annual returns, holdings, and portfolio growth and examine how these affect their overall returns.
Summary
| DGRO | IWN | |
| Name | iShares Core Dividend Growth ETF | iShares Russell 2000 Value ETF |
| Category | Large Value | Small Value |
| Issuer | iShares | iShares |
| AUM | 20B | 15.48B |
| Avg. Return | 12.46% | 10.96% |
| Div. Yield | 2.04% | 1.26% |
| Expense Ratio | 0.08% | 0.24% |
The iShares Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.
The iShares Russell 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.
DGRO’s dividend yield is 0.78% higher than that of IWN (2.04% vs. 1.26%). Also, DGRO yielded on average 1.50% more per year over the past decade (12.46% vs. 10.96%). The expense ratio of DGRO is 0.16 percentage points lower than IWN’s (0.08% vs. 0.24%).
Fund Composition
Industry Exposure
| DGRO | IWN | |
| Technology | 18.98% | 6.02% |
| Industrials | 12.52% | 14.58% |
| Energy | 0.11% | 5.84% |
| Communication Services | 4.53% | 4.17% |
| Utilities | 7.34% | 4.69% |
| Healthcare | 17.55% | 10.94% |
| Consumer Defensive | 10.24% | 3.77% |
| Real Estate | 0.0% | 14.36% |
| Financial Services | 18.47% | 22.97% |
| Consumer Cyclical | 7.42% | 8.39% |
| Basic Materials | 2.83% | 4.29% |
The iShares Core Dividend Growth ETF (DGRO) has the most exposure to the Technology sector at 18.98%. This is followed by Financial Services and Healthcare at 18.47% and 17.55% respectively. Energy (0.11%), Basic Materials (2.83%), and Communication Services (4.53%) only make up 7.47% of the fund’s total assets.
DGRO’s mid-section with moderate exposure is comprised of Utilities, Consumer Cyclical, Consumer Defensive, Industrials, and Healthcare stocks at 7.34%, 7.42%, 10.24%, 12.52%, and 17.55%.
The iShares Russell 2000 Value ETF (IWN) has the most exposure to the Financial Services sector at 22.97%. This is followed by Industrials and Real Estate at 14.58% and 14.36% respectively. Communication Services (4.17%), Basic Materials (4.29%), and Utilities (4.69%) only make up 13.15% of the fund’s total assets.
IWN’s mid-section with moderate exposure is comprised of Energy, Technology, Consumer Cyclical, Healthcare, and Real Estate stocks at 5.84%, 6.02%, 8.39%, 10.94%, and 14.36%.
DGRO is 12.96% more exposed to the Technology sector than IWN (18.98% vs 6.02%). DGRO’s exposure to Financial Services and Healthcare stocks is 4.50% lower and 6.61% higher respectively (18.47% vs. 22.97% and 17.55% vs. 10.94%). In total, Energy, Basic Materials, and Communication Services also make up 6.83% less of the fund’s holdings compared to IWN (7.47% vs. 14.30%).
Holdings
| DGRO Holdings | Weight |
| Microsoft Corp | 3.29% |
| Apple Inc | 3.26% |
| Pfizer Inc | 2.89% |
| Johnson & Johnson | 2.87% |
| Procter & Gamble Co | 2.79% |
| Verizon Communications Inc | 2.68% |
| JPMorgan Chase & Co | 2.57% |
| The Home Depot Inc | 2.35% |
| Merck & Co Inc | 2.11% |
| Cisco Systems Inc | 1.98% |
DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.
Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.
| IWN Holdings | Weight |
| AMC Entertainment Holdings Inc Class A | 1.06% |
| Tenet Healthcare Corp | 0.47% |
| Stag Industrial Inc | 0.47% |
| Ovintiv Inc | 0.45% |
| EMCOR Group Inc | 0.42% |
| Valley National Bancorp | 0.37% |
| Chesapeake Energy Corp Ordinary Shares – New | 0.37% |
| Agree Realty Corp | 0.36% |
| Macy’s Inc | 0.35% |
| Essent Group Ltd | 0.35% |
IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.
Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.
Risk Analysis
| DGRO | IWN | |
| Mean Return | 0 | 1.01 |
| R-squared | 0 | 72.64 |
| Std. Deviation | 0 | 19.28 |
| Alpha | 0 | -6.32 |
| Beta | 0 | 1.21 |
| Sharpe Ratio | 0 | 0.59 |
| Treynor Ratio | 0 | 8.3 |
The iShares Core Dividend Growth ETF (DGRO) has a Treynor Ratio of 0 with a Alpha of 0 and a Sharpe Ratio of 0. Its R-squared is 0 while DGRO’s Mean Return is 0. Furthermore, the fund has a Standard Deviation of 0 and a Beta of 0.
The iShares Russell 2000 Value ETF (IWN) has a Treynor Ratio of 8.3 with a R-squared of 72.64 and a Sharpe Ratio of 0.59. Its Beta is 1.21 while IWN’s Mean Return is 1.01. Furthermore, the fund has a Alpha of -6.32 and a Standard Deviation of 19.28.
DGRO’s Mean Return is 1.01 points lower than that of IWN and its R-squared is 72.64 points lower. With a Standard Deviation of 0, DGRO is slightly less volatile than IWN. The Alpha and Beta of DGRO are 6.32 points higher and 1.21 points lower than IWN’s Alpha and Beta.
Performance
Annual Returns
| Year | DGRO | IWN |
| 2020 | 9.47% | 4.5% |
| 2019 | 30.02% | 22.17% |
| 2018 | -2.24% | -12.94% |
| 2017 | 22.84% | 7.73% |
| 2016 | 15.27% | 31.64% |
| 2015 | -0.62% | -7.53% |
| 2014 | 0.0% | 4.13% |
| 2013 | 0.0% | 34.3% |
| 2012 | 0.0% | 17.92% |
| 2011 | 0.0% | -5.64% |
| 2010 | 0.0% | 24.29% |
DGRO had its best year in 2019 with an annual return of 30.02%. DGRO’s worst year over the past decade yielded -2.24% and occurred in 2018. In most years the iShares Core Dividend Growth ETF provided moderate returns such as in 2012, 2011, and 2010 where annual returns amounted to 0.0%, 0.0%, and 0.0% respectively.
The year 2013 was the strongest year for IWN, returning 34.3% on an annual basis. The poorest year for IWN in the last ten years was 2018, with a yield of -12.94%. Most years the iShares Russell 2000 Value ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 4.5%, 7.73%, and 17.92% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| DGRO | $10,000 | $19,580 | 12.46% |
| IWN | $10,000 | $14,575 | 10.96% |
A $10,000 investment in DGRO would have resulted in a final balance of $19,580. This is a profit of $9,580 over 6 years and amounts to a compound annual growth rate (CAGR) of 12.46%.
With a $10,000 investment in IWN, the end total would have been $14,575. This equates to a $4,575 profit over 6 years and a compound annual growth rate (CAGR) of 10.96%.
DGRO’s CAGR is 1.50 percentage points higher than that of IWN and as a result, would have yielded $5,005 more on a $10,000 investment. Thus, DGRO outperformed IWN by 1.50% annually.
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