IJR vs. VGK: What’s The Difference?

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

The expense ratio of IJR is 0.02 percentage points lower than VGK’s (0.06% vs. 0.08%). IJR also has a higher exposure to the industrials sector and a higher standard deviation. Overall, IJR has provided higher returns than VGK over the past ten years.

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

Summary

IJR VGK
Name iShares Core S&P Small-Cap ETF Vanguard FTSE Europe Index Fund ETF Shares
Category Small Blend Europe Stock
Issuer iShares Vanguard
AUM 68.64B 25.7B
Avg. Return 13.97% 6.68%
Div. Yield 0.96% 2.52%
Expense Ratio 0.06% 0.08%

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 FTSE Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% with an expense ratio of 0.08%.

IJR’s dividend yield is 1.56% lower than that of VGK (0.96% vs. 2.52%). Also, IJR yielded on average 7.29% more per year over the past decade (13.97% vs. 6.68%). The expense ratio of IJR is 0.02 percentage points lower than VGK’s (0.06% vs. 0.08%).

Fund Composition

Industry Exposure

IJR vs. VGK - Industry Exposure

IJR VGK
Technology 14.32% 8.3%
Industrials 17.31% 15.58%
Energy 4.0% 4.3%
Communication Services 2.59% 5.09%
Utilities 1.8% 3.89%
Healthcare 11.55% 13.76%
Consumer Defensive 4.01% 11.39%
Real Estate 9.55% 2.57%
Financial Services 15.91% 15.85%
Consumer Cyclical 13.61% 11.6%
Basic Materials 5.34% 7.67%

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 FTSE Europe Index Fund ETF Shares (VGK) has the most exposure to the Financial Services sector at 15.85%. This is followed by Industrials and Healthcare at 15.58% and 13.76% respectively. Utilities (3.89%), Energy (4.3%), and Communication Services (5.09%) only make up 13.28% of the fund’s total assets.

VGK’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.67%, 8.3%, 11.39%, 11.6%, and 13.76%.

IJR is 1.73% more exposed to the Industrials sector than VGK (17.31% vs 15.58%). IJR’s exposure to Financial Services and Technology stocks is 0.06% higher and 6.02% higher respectively (15.91% vs. 15.85% and 14.32% vs. 8.3%). In total, Communication Services, Energy, and Consumer Defensive also make up 10.18% less of the fund’s holdings compared to VGK (10.60% vs. 20.78%).

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%.

VGK - Holdings

VGK Holdings Weight
Nestle SA 2.82%
ASML Holding NV 2.2%
Roche Holding AG 2.13%
LVMH Moet Hennessy Louis Vuitton SE 1.58%
Novartis AG 1.55%
AstraZeneca PLC 1.27%
SAP SE 1.25%
Unilever PLC 1.23%
Novo Nordisk A/S B 1.09%
Siemens AG 0.96%

VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.

AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.

Risk Analysis

IJR VGK
Mean Return 1.21 0.61
R-squared 76.03 92.76
Std. Deviation 18.68 16.65
Alpha -3.7 0.45
Beta 1.2 1.06
Sharpe Ratio 0.74 0.4
Treynor Ratio 10.77 5.12

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

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Sharpe Ratio of 0.4 with a Standard Deviation of 16.65 and a R-squared of 92.76. Its Mean Return is 0.61 while VGK’s Alpha is 0.45. Furthermore, the fund has a Treynor Ratio of 5.12 and a Beta of 1.06.

IJR’s Mean Return is 0.60 points higher than that of VGK and its R-squared is 16.73 points lower. With a Standard Deviation of 18.68, IJR is slightly more volatile than VGK. The Alpha and Beta of IJR are 4.15 points lower and 0.14 points higher than VGK’s Alpha and Beta.

Performance

Annual Returns

IJR vs. VGK - Annual Returns

Year IJR VGK
2020 11.24% 6.5%
2019 22.79% 24.26%
2018 -8.43% -14.79%
2017 13.2% 27.06%
2016 26.49% -0.59%
2015 -2.0% -1.87%
2014 5.67% -6.56%
2013 41.36% 24.93%
2012 16.28% 21.01%
2011 0.9% -11.49%
2010 26.14% 5.01%

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 2017 was the strongest year for VGK, returning 27.06% on an annual basis. The poorest year for VGK in the last ten years was 2018, with a yield of -14.79%. Most years the Vanguard FTSE Europe Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were -0.59%, 5.01%, and 6.5% respectively.

Portfolio Growth

IJR vs. VGK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IJR $10,000 $38,800 13.97%
VGK $10,000 $18,350 6.68%

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 VGK, the end total would have been $18,350. This equates to a $8,350 profit over 11 years and a compound annual growth rate (CAGR) of 6.68%.

IJR’s CAGR is 7.29 percentage points higher than that of VGK and as a result, would have yielded $20,450 more on a $10,000 investment. Thus, IJR outperformed VGK by 7.29% annually.


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