IJR vs. VBR: What’s The Difference?

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

The expense ratio of IJR is 0.01 percentage points lower than VBR’s (0.06% vs. 0.07%). IJR also has a lower exposure to the industrials sector and a higher standard deviation. Overall, IJR has provided higher returns than VBR over the past ten years.

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

Summary

IJR VBR
Name iShares Core S&P Small-Cap ETF Vanguard Small-Cap Value Index Fund ETF Shares
Category Small Blend Small Value
Issuer iShares Vanguard
AUM 68.64B 48.08B
Avg. Return 13.97% 12.28%
Div. Yield 0.96% 1.6%
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 Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.

IJR’s dividend yield is 0.64% lower than that of VBR (0.96% vs. 1.6%). Also, IJR yielded on average 1.69% more per year over the past decade (13.97% vs. 12.28%). The expense ratio of IJR is 0.01 percentage points lower than VBR’s (0.06% vs. 0.07%).

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Fund Composition

Industry Exposure

IJR vs. VBR - Industry Exposure

IJR VBR
Technology 14.32% 8.39%
Industrials 17.31% 18.44%
Energy 4.0% 5.15%
Communication Services 2.59% 1.77%
Utilities 1.8% 3.65%
Healthcare 11.55% 7.16%
Consumer Defensive 4.01% 4.36%
Real Estate 9.55% 10.92%
Financial Services 15.91% 20.04%
Consumer Cyclical 13.61% 13.82%
Basic Materials 5.34% 6.31%

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 Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.

VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.

IJR is 1.13% less exposed to the Industrials sector than VBR (17.31% vs 18.44%). IJR’s exposure to Financial Services and Technology stocks is 4.13% lower and 5.93% higher respectively (15.91% vs. 20.04% and 14.32% vs. 8.39%). In total, Communication Services, Energy, and Consumer Defensive also make up 0.68% less of the fund’s holdings compared to VBR (10.60% vs. 11.28%).

Holdings

IJR - 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%.

VBR - Holdings

VBR Holdings Weight
Diamondback Energy Inc 0.55%
VICI Properties Inc Ordinary Shares 0.54%
IDEX Corp 0.54%
Nuance Communications Inc 0.5%
Molina Healthcare Inc 0.48%
Signature Bank 0.46%
Novavax Inc 0.44%
Howmet Aerospace Inc 0.44%
Apollo Global Management Inc Class A 0.42%
Brown & Brown Inc 0.41%

VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.

Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.

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Risk Analysis

IJR VBR
Mean Return 1.21 1.08
R-squared 76.03 82.2
Std. Deviation 18.68 18.37
Alpha -3.7 -5.09
Beta 1.2 1.23
Sharpe Ratio 0.74 0.67
Treynor Ratio 10.77 9.15

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 Sharpe Ratio is 0.74 while IJR’s R-squared is 76.03. Furthermore, the fund has a Beta of 1.2 and a Standard Deviation of 18.68.

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Standard Deviation of 18.37 with a Sharpe Ratio of 0.67 and a R-squared of 82.2. Its Mean Return is 1.08 while VBR’s Beta is 1.23. Furthermore, the fund has a Alpha of -5.09 and a Treynor Ratio of 9.15.

IJR’s Mean Return is 0.13 points higher than that of VBR and its R-squared is 6.17 points lower. With a Standard Deviation of 18.68, IJR is slightly more volatile than VBR. The Alpha and Beta of IJR are 1.39 points higher and 0.03 points lower than VBR’s Alpha and Beta.

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Performance

Annual Returns

IJR vs. VBR - Annual Returns

Year IJR VBR
2020 11.24% 5.82%
2019 22.79% 22.76%
2018 -8.43% -12.22%
2017 13.2% 11.79%
2016 26.49% 24.8%
2015 -2.0% -4.67%
2014 5.67% 10.55%
2013 41.36% 36.57%
2012 16.28% 18.78%
2011 0.9% -4.05%
2010 26.14% 24.97%

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 VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% respectively.

Portfolio Growth

IJR vs. VBR - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IJR $10,000 $38,800 13.97%
VBR $10,000 $32,611 12.28%

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 VBR, the end total would have been $32,611. This equates to a $22,611 profit over 11 years and a compound annual growth rate (CAGR) of 12.28%.

IJR’s CAGR is 1.69 percentage points higher than that of VBR and as a result, would have yielded $6,189 more on a $10,000 investment. Thus, IJR outperformed VBR by 1.69% annually.


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