DGRO vs. IWS: What’s The Difference?

The iShares Core Dividend Growth ETF (DGRO) and the iShares Russell Mid-Cap Value ETF (IWS) are both among the Top 100 ETFs. DGRO is a iShares Large Value fund and IWS is a iShares Mid-Cap Value fund. So, what’s the difference between DGRO and IWS? And which fund is better?

The expense ratio of DGRO is 0.15 percentage points lower than IWS’s (0.08% vs. 0.23%). DGRO also has a higher exposure to the technology sector and a lower standard deviation. Overall, DGRO has provided higher returns than IWS over the past 6 years.

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

Summary

DGRO IWS
Name iShares Core Dividend Growth ETF iShares Russell Mid-Cap Value ETF
Category Large Value Mid-Cap Value
Issuer iShares iShares
AUM 20B 14.24B
Avg. Return 12.46% 12.35%
Div. Yield 2.04% 1.34%
Expense Ratio 0.08% 0.23%

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 Mid-Cap Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

DGRO’s dividend yield is 0.70% higher than that of IWS (2.04% vs. 1.34%). Also, DGRO yielded on average 0.11% more per year over the past decade (12.46% vs. 12.35%). The expense ratio of DGRO is 0.15 percentage points lower than IWS’s (0.08% vs. 0.23%).

Fund Composition

Industry Exposure

DGRO vs. IWS - Industry Exposure

DGRO IWS
Technology 18.98% 11.39%
Industrials 12.52% 14.6%
Energy 0.11% 4.71%
Communication Services 4.53% 4.08%
Utilities 7.34% 6.97%
Healthcare 17.55% 8.56%
Consumer Defensive 10.24% 4.76%
Real Estate 0.0% 11.71%
Financial Services 18.47% 15.75%
Consumer Cyclical 7.42% 12.07%
Basic Materials 2.83% 5.4%

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 Mid-Cap Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.

IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.

DGRO is 7.59% more exposed to the Technology sector than IWS (18.98% vs 11.39%). DGRO’s exposure to Financial Services and Healthcare stocks is 2.72% higher and 8.99% higher respectively (18.47% vs. 15.75% and 17.55% vs. 8.56%). In total, Energy, Basic Materials, and Communication Services also make up 6.72% less of the fund’s holdings compared to IWS (7.47% vs. 14.19%).

Holdings

DGRO - 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%.

IWS - Holdings

IWS Holdings Weight
Twitter Inc 0.69%
Marvell Technology Inc 0.69%
IHS Markit Ltd 0.62%
Prudential Financial Inc 0.56%
Otis Worldwide Corp Ordinary Shares 0.54%
International Flavors & Fragrances Inc 0.53%
Xcel Energy Inc 0.52%
Motorola Solutions Inc 0.52%
Aptiv PLC 0.52%
Aflac Inc 0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

Risk Analysis

DGRO IWS
Mean Return 0 1.06
R-squared 0 87.04
Std. Deviation 0 16.03
Alpha 0 -4.11
Beta 0 1.1
Sharpe Ratio 0 0.75
Treynor Ratio 0 10.3

The iShares Core Dividend Growth ETF (DGRO) has a Beta of 0 with a Sharpe Ratio of 0 and a Treynor Ratio of 0. Its R-squared is 0 while DGRO’s Standard Deviation is 0. Furthermore, the fund has a Mean Return of 0 and a Alpha of 0.

The iShares Russell Mid-Cap Value ETF (IWS) has a Mean Return of 1.06 with a Sharpe Ratio of 0.75 and a Standard Deviation of 16.03. Its R-squared is 87.04 while IWS’s Treynor Ratio is 10.3. Furthermore, the fund has a Alpha of -4.11 and a Beta of 1.1.

DGRO’s Mean Return is 1.06 points lower than that of IWS and its R-squared is 87.04 points lower. With a Standard Deviation of 0, DGRO is slightly less volatile than IWS. The Alpha and Beta of DGRO are 4.11 points higher and 1.10 points lower than IWS’s Alpha and Beta.

Performance

Annual Returns

DGRO vs. IWS - Annual Returns

Year DGRO IWS
2020 9.47% 4.76%
2019 30.02% 26.78%
2018 -2.24% -12.36%
2017 22.84% 13.1%
2016 15.27% 19.69%
2015 -0.62% -4.93%
2014 0.0% 14.49%
2013 0.0% 33.11%
2012 0.0% 18.27%
2011 0.0% -1.55%
2010 0.0% 24.46%

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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

DGRO vs. IWS - Portfolio Growth

Fund Initial Balance Final Balance CAGR
DGRO $10,000 $19,580 12.46%
IWS $10,000 $14,980 12.35%

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 IWS, the end total would have been $14,980. This equates to a $4,980 profit over 6 years and a compound annual growth rate (CAGR) of 12.35%.

DGRO’s CAGR is 0.11 percentage points higher than that of IWS and as a result, would have yielded $4,600 more on a $10,000 investment. Thus, DGRO outperformed IWS by 0.11% annually.


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