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IJR vs. VB: What’s The Difference?

The iShares Core S&P Small-Cap ETF (IJR) and the Vanguard Small-Cap Index Fund ETF Shares (VB) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and VB is a Vanguard Small Blend fund. So, what’s the difference between IJR and VB? And which fund is better?

The expense ratio of IJR is 0.01 percentage points higher than VB’s (0.06% vs. 0.05%). IJR also has a higher exposure to the industrials sector and a higher standard deviation. Overall, IJR has provided lower returns than VB over the past ten years.

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

Introduction To Mutual Funds
Introduction To Mutual Funds
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Summary

IJRVB
NameiShares Core S&P Small-Cap ETFVanguard Small-Cap Index Fund ETF Shares
CategorySmall BlendSmall Blend
IssueriSharesVanguard
AUM68.64B137.72B
Avg. Return13.97%14.25%
Div. Yield0.96%1.14%
Expense Ratio0.06%0.05%

The iShares Core S&P Small-Cap ETF (IJR) is a Small Blend fund that is issued by iShares. It currently has 68.64B total assets under management and has yielded an average annual return of 13.97% over the past 10 years. The fund has a dividend yield of 0.96% with an expense ratio of 0.06%.

The Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.05%.

IJR’s dividend yield is 0.18% lower than that of VB (0.96% vs. 1.14%). Also, IJR yielded on average 0.29% less per year over the past decade (13.97% vs. 14.25%). The expense ratio of IJR is 0.01 percentage points higher than VB’s (0.06% vs. 0.05%).

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Fund Composition

Industry Exposure

IJR vs. VB - Industry Exposure

IJRVB
Technology14.32%16.85%
Industrials17.31%16.11%
Energy4.0%3.67%
Communication Services2.59%2.4%
Utilities1.8%2.19%
Healthcare11.55%14.34%
Consumer Defensive4.01%4.14%
Real Estate9.55%9.56%
Financial Services15.91%13.06%
Consumer Cyclical13.61%13.03%
Basic Materials5.34%4.63%

The iShares Core S&P Small-Cap ETF (IJR) has the most exposure to the Industrials sector at 17.31%. This is followed by Financial Services and Technology at 15.91% and 14.32% respectively. Communication Services (2.59%), Energy (4.0%), and Consumer Defensive (4.01%) only make up 10.60% of the fund’s total assets.

IJR’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Consumer Cyclical, and Technology stocks at 5.34%, 9.55%, 11.55%, 13.61%, and 14.32%.

The Vanguard Small-Cap Index Fund ETF Shares (VB) has the most exposure to the Technology sector at 16.85%. This is followed by Industrials and Healthcare at 16.11% and 14.34% respectively. Communication Services (2.4%), Energy (3.67%), and Consumer Defensive (4.14%) only make up 10.21% of the fund’s total assets.

VB’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Healthcare stocks at 4.63%, 9.56%, 13.03%, 13.06%, and 14.34%.

IJR is 1.20% more exposed to the Industrials sector than VB (17.31% vs 16.11%). IJR’s exposure to Financial Services and Technology stocks is 2.85% higher and 2.53% lower respectively (15.91% vs. 13.06% and 14.32% vs. 16.85%). In total, Communication Services, Energy, and Consumer Defensive also make up 0.39% more of the fund’s holdings compared to VB (10.60% vs. 10.21%).

Holdings

IJR - Holdings

IJR HoldingsWeight
BlackRock Cash Funds Treasury SL Agency1.08%
GameStop Corp Class A0.86%
Omnicell Inc0.61%
Stamps.com Inc0.58%
Saia Inc0.57%
Power Integrations Inc0.57%
Exponent Inc0.54%
NeoGenomics Inc0.53%
Chart Industries Inc0.53%
Macy’s Inc0.51%

IJR’s Top Holdings are BlackRock Cash Funds Treasury SL Agency, GameStop Corp Class A, Omnicell Inc, Stamps.com Inc, and Saia Inc at 1.08%, 0.86%, 0.61%, 0.58%, and 0.57%.

Power Integrations Inc (0.57%), Exponent Inc (0.54%), and NeoGenomics Inc (0.53%) have a slightly smaller but still significant weight. Chart Industries Inc and Macy’s Inc are also represented in the IJR’s holdings at 0.53% and 0.51%.

VB - Holdings

VB HoldingsWeight
Charles River Laboratories International Inc0.34%
Pool Corp0.32%
Bio-Techne Corp0.32%
Avantor Inc0.32%
PerkinElmer Inc0.31%
Diamondback Energy Inc0.31%
VICI Properties Inc Ordinary Shares0.3%
IDEX Corp0.3%
Entegris Inc0.3%
Novavax Inc0.29%

VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.

Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.

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Risk Analysis

IJRVB
Mean Return1.211.15
R-squared76.0385.03
Std. Deviation18.6817.82
Alpha-3.7-4.02
Beta1.21.21
Sharpe Ratio0.740.74
Treynor Ratio10.7710.15

The iShares Core S&P Small-Cap ETF (IJR) has a Treynor Ratio of 10.77 with a Alpha of -3.7 and a Mean Return of 1.21. Its Standard Deviation is 18.68 while IJR’s R-squared is 76.03. Furthermore, the fund has a Beta of 1.2 and a Sharpe Ratio of 0.74.

The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Mean Return of 1.15 with a Alpha of -4.02 and a Beta of 1.21. Its Standard Deviation is 17.82 while VB’s Treynor Ratio is 10.15. Furthermore, the fund has a R-squared of 85.03 and a Sharpe Ratio of 0.74.

IJR’s Mean Return is 0.06 points higher than that of VB and its R-squared is 9.00 points lower. With a Standard Deviation of 18.68, IJR is slightly more volatile than VB. The Alpha and Beta of IJR are 0.32 points higher and 0.01 points lower than VB’s Alpha and Beta.

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Performance

Annual Returns

IJR vs. VB - Annual Returns

YearIJRVB
202011.24%19.08%
201922.79%27.37%
2018-8.43%-9.3%
201713.2%16.24%
201626.49%18.31%
2015-2.0%-3.65%
20145.67%7.51%
201341.36%37.8%
201216.28%18.22%
20110.9%-2.68%
201026.14%27.89%

IJR had its best year in 2013 with an annual return of 41.36%. IJR’s worst year over the past decade yielded -8.43% and occurred in 2018. In most years the iShares Core S&P Small-Cap ETF provided moderate returns such as in 2020, 2017, and 2012 where annual returns amounted to 11.24%, 13.2%, and 16.28% respectively.

The year 2013 was the strongest year for VB, returning 37.8% on an annual basis. The poorest year for VB in the last ten years was 2018, with a yield of -9.3%. Most years the Vanguard Small-Cap Index Fund ETF Shares has given investors modest returns, such as in 2017, 2012, and 2016, when gains were 16.24%, 18.22%, and 18.31% respectively.

Portfolio Growth

IJR vs. VB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IJR$10,000$38,80013.97%
VB$10,000$39,73414.25%

A $10,000 investment in IJR would have resulted in a final balance of $38,800. This is a profit of $28,800 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.97%.

With a $10,000 investment in VB, the end total would have been $39,734. This equates to a $29,734 profit over 11 years and a compound annual growth rate (CAGR) of 14.25%.

IJR’s CAGR is 0.29 percentage points lower than that of VB and as a result, would have yielded $934 less on a $10,000 investment. Thus, IJR performed worse than VB by 0.29% annually.


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