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IJR vs. VHT: What’s The Difference?

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

The expense ratio of IJR is 0.04 percentage points lower than VHT’s (0.06% vs. 0.1%). IJR also has a higher exposure to the industrials sector and a higher standard deviation. Overall, IJR has provided lower returns than VHT over the past ten years.

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

Introduction To Mutual Funds
Introduction To Mutual Funds
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Summary

IJRVHT
NameiShares Core S&P Small-Cap ETFVanguard Health Care Index Fund ETF Shares
CategorySmall BlendHealth
IssueriSharesVanguard
AUM68.64B17.94B
Avg. Return13.97%16.04%
Div. Yield0.96%1.15%
Expense Ratio0.06%0.1%

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 Health Care Index Fund ETF Shares (VHT) is a Health fund that is issued by Vanguard. It currently has 17.94B total assets under management and has yielded an average annual return of 16.04% over the past 10 years. The fund has a dividend yield of 1.15% with an expense ratio of 0.1%.

IJR’s dividend yield is 0.19% lower than that of VHT (0.96% vs. 1.15%). Also, IJR yielded on average 2.07% less per year over the past decade (13.97% vs. 16.04%). The expense ratio of IJR is 0.04 percentage points lower than VHT’s (0.06% vs. 0.1%).

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Fund Composition

Industry Exposure

IJR vs. VHT - Industry Exposure

IJRVHT
Technology14.32%0.05%
Industrials17.31%0.05%
Energy4.0%0.0%
Communication Services2.59%0.0%
Utilities1.8%0.0%
Healthcare11.55%99.57%
Consumer Defensive4.01%0.0%
Real Estate9.55%0.0%
Financial Services15.91%0.02%
Consumer Cyclical13.61%0.0%
Basic Materials5.34%0.31%

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 Health Care Index Fund ETF Shares (VHT) has the most exposure to the Healthcare sector at 99.57%. This is followed by Basic Materials and Technology at 0.31% and 0.05% respectively. Real Estate (0.0%), Consumer Defensive (0.0%), and Utilities (0.0%) only make up 0.00% of the fund’s total assets.

VHT’s mid-section with moderate exposure is comprised of Communication Services, Energy, Financial Services, Industrials, and Technology stocks at 0.0%, 0.0%, 0.02%, 0.05%, and 0.05%.

IJR is 17.26% more exposed to the Industrials sector than VHT (17.31% vs 0.05%). IJR’s exposure to Financial Services and Technology stocks is 15.89% higher and 14.27% higher respectively (15.91% vs. 0.02% and 14.32% vs. 0.05%). In total, Communication Services, Energy, and Consumer Defensive also make up 10.60% more of the fund’s holdings compared to VHT (10.60% vs. 0.00%).

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%.

VHT - Holdings

VHT HoldingsWeight
Johnson & Johnson7.34%
UnitedHealth Group Inc6.44%
Pfizer Inc3.7%
Abbott Laboratories3.48%
Thermo Fisher Scientific Inc3.37%
AbbVie Inc3.37%
Merck & Co Inc3.33%
Eli Lilly and Co3.17%
Danaher Corp2.91%
Medtronic PLC2.83%

VHT’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and Thermo Fisher Scientific Inc at 7.34%, 6.44%, 3.7%, 3.48%, and 3.37%.

AbbVie Inc (3.37%), Merck & Co Inc (3.33%), and Eli Lilly and Co (3.17%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the VHT’s holdings at 2.91% and 2.83%.

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Risk Analysis

IJRVHT
Mean Return1.211.33
R-squared76.0359.86
Std. Deviation18.6813.58
Alpha-3.77.99
Beta1.20.75
Sharpe Ratio0.741.13
Treynor Ratio10.7720.74

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

The Vanguard Health Care Index Fund ETF Shares (VHT) has a Mean Return of 1.33 with a Alpha of 7.99 and a Sharpe Ratio of 1.13. Its R-squared is 59.86 while VHT’s Treynor Ratio is 20.74. Furthermore, the fund has a Beta of 0.75 and a Standard Deviation of 13.58.

IJR’s Mean Return is 0.12 points lower than that of VHT and its R-squared is 16.17 points higher. With a Standard Deviation of 18.68, IJR is slightly more volatile than VHT. The Alpha and Beta of IJR are 11.69 points lower and 0.45 points higher than VHT’s Alpha and Beta.

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Performance

Annual Returns

IJR vs. VHT - Annual Returns

YearIJRVHT
202011.24%18.21%
201922.79%21.97%
2018-8.43%5.55%
201713.2%23.34%
201626.49%-3.33%
2015-2.0%7.22%
20145.67%25.38%
201341.36%42.67%
201216.28%19.1%
20110.9%10.57%
201026.14%5.75%

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 VHT, returning 42.67% on an annual basis. The poorest year for VHT in the last ten years was 2016, with a yield of -3.33%. Most years the Vanguard Health Care Index Fund ETF Shares has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 10.57%, 18.21%, and 19.1% respectively.

Portfolio Growth

IJR vs. VHT - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IJR$10,000$38,80013.97%
VHT$10,000$48,46416.04%

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 VHT, the end total would have been $48,464. This equates to a $38,464 profit over 11 years and a compound annual growth rate (CAGR) of 16.04%.

IJR’s CAGR is 2.07 percentage points lower than that of VHT and as a result, would have yielded $9,664 less on a $10,000 investment. Thus, IJR performed worse than VHT by 2.07% annually.


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