The iShares Core S&P Small-Cap ETF (IJR) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between IJR and VBK? And which fund is better?
The expense ratio of IJR is 0.01 percentage points lower than VBK’s (0.06% vs. 0.07%). IJR also has a higher exposure to the industrials sector and a higher standard deviation. Overall, IJR has provided lower returns than VBK over the past ten years.
In this article, we’ll compare IJR vs. VBK. We’ll look at fund composition and annual returns, as well as at their portfolio growth and holdings. Moreover, I’ll also discuss IJR’s and VBK’s risk metrics, performance, and industry exposure and examine how these affect their overall returns.
Summary
| IJR | VBK | |
| Name | iShares Core S&P Small-Cap ETF | Vanguard Small-Cap Growth Index Fund ETF Shares |
| Category | Small Blend | Small Growth |
| Issuer | iShares | Vanguard |
| AUM | 68.64B | 37.89B |
| Avg. Return | 13.97% | 16.53% |
| Div. Yield | 0.96% | 0.45% |
| Expense Ratio | 0.06% | 0.07% |
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 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%.
IJR’s dividend yield is 0.51% higher than that of VBK (0.96% vs. 0.45%). Also, IJR yielded on average 2.56% less per year over the past decade (13.97% vs. 16.53%). The expense ratio of IJR is 0.01 percentage points lower than VBK’s (0.06% vs. 0.07%).
Fund Composition
Industry Exposure
| IJR | VBK | |
| Technology | 14.32% | 27.87% |
| Industrials | 17.31% | 13.19% |
| Energy | 4.0% | 1.77% |
| Communication Services | 2.59% | 3.24% |
| Utilities | 1.8% | 0.32% |
| Healthcare | 11.55% | 23.24% |
| Consumer Defensive | 4.01% | 3.83% |
| Real Estate | 9.55% | 7.87% |
| Financial Services | 15.91% | 4.05% |
| Consumer Cyclical | 13.61% | 12.13% |
| Basic Materials | 5.34% | 2.49% |
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 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%.
IJR is 4.12% more exposed to the Industrials sector than VBK (17.31% vs 13.19%). IJR’s exposure to Financial Services and Technology stocks is 11.86% higher and 13.55% lower respectively (15.91% vs. 4.05% and 14.32% vs. 27.87%). In total, Communication Services, Energy, and Consumer Defensive also make up 1.76% more of the fund’s holdings compared to VBK (10.60% vs. 8.84%).
Holdings
| IJR Holdings | Weight |
| BlackRock Cash Funds Treasury SL Agency | 1.08% |
| GameStop Corp Class A | 0.86% |
| Omnicell Inc | 0.61% |
| Stamps.com Inc | 0.58% |
| Saia Inc | 0.57% |
| Power Integrations Inc | 0.57% |
| Exponent Inc | 0.54% |
| NeoGenomics Inc | 0.53% |
| Chart Industries Inc | 0.53% |
| Macy’s Inc | 0.51% |
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%.
| 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%.
Risk Analysis
| IJR | VBK | |
| Mean Return | 1.21 | 1.22 |
| R-squared | 76.03 | 80.56 |
| Std. Deviation | 18.68 | 17.95 |
| Alpha | -3.7 | -2.81 |
| Beta | 1.2 | 1.18 |
| Sharpe Ratio | 0.74 | 0.78 |
| Treynor Ratio | 10.77 | 11.18 |
The iShares Core S&P Small-Cap ETF (IJR) has a Sharpe Ratio of 0.74 with a Beta of 1.2 and a Treynor Ratio of 10.77. Its R-squared is 76.03 while IJR’s Standard Deviation is 18.68. Furthermore, the fund has a Mean Return of 1.21 and a Alpha of -3.7.
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Treynor Ratio of 11.18 with a Standard Deviation of 17.95 and a Beta of 1.18. Its Mean Return is 1.22 while VBK’s Alpha is -2.81. Furthermore, the fund has a Sharpe Ratio of 0.78 and a R-squared of 80.56.
IJR’s Mean Return is 0.01 points lower than that of VBK and its R-squared is 4.53 points lower. With a Standard Deviation of 18.68, IJR is slightly more volatile than VBK. The Alpha and Beta of IJR are 0.89 points lower and 0.02 points higher than VBK’s Alpha and Beta.
Performance
Annual Returns
| Year | IJR | VBK |
| 2020 | 11.24% | 35.29% |
| 2019 | 22.79% | 32.75% |
| 2018 | -8.43% | -5.68% |
| 2017 | 13.2% | 21.9% |
| 2016 | 26.49% | 10.74% |
| 2015 | -2.0% | -2.51% |
| 2014 | 5.67% | 4.02% |
| 2013 | 41.36% | 38.18% |
| 2012 | 16.28% | 17.67% |
| 2011 | 0.9% | -1.43% |
| 2010 | 26.14% | 30.87% |
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 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
| Fund | Initial Balance | Final Balance | CAGR |
| IJR | $10,000 | $38,800 | 13.97% |
| VBK | $10,000 | $48,639 | 16.53% |
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 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%.
IJR’s CAGR is 2.56 percentage points lower than that of VBK and as a result, would have yielded $9,839 less on a $10,000 investment. Thus, IJR performed worse than VBK by 2.56% annually.
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