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IJR vs. VIG: What’s The Difference?

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

Introduction To Mutual Funds
Introduction To Mutual Funds

IJR and VIG have the same expense ratio: 0.06%. IJR also has a higher exposure to the industrials sector and a higher standard deviation. Overall, IJR has provided higher returns than VIG over the past ten years.

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

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Summary

IJRVIG
NameiShares Core S&P Small-Cap ETFVanguard Dividend Appreciation Index Fund ETF Shares
CategorySmall BlendLarge Blend
IssueriSharesVanguard
AUM68.64B71.92B
Avg. Return13.97%13.35%
Div. Yield0.96%1.56%
Expense Ratio0.06%0.06%

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 Dividend Appreciation Index Fund ETF Shares (VIG) is a Large Blend fund that is issued by Vanguard. It currently has 71.92B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.56% with an expense ratio of 0.06%.

IJR’s dividend yield is 0.60% lower than that of VIG (0.96% vs. 1.56%). Also, IJR yielded on average 0.62% more per year over the past decade (13.97% vs. 13.35%). IJR and VIG have the same expense ratio: 0.06%.

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Fund Composition

Industry Exposure

IJR vs. VIG - Industry Exposure

IJRVIG
Technology14.32%14.93%
Industrials17.31%17.23%
Energy4.0%0.0%
Communication Services2.59%2.86%
Utilities1.8%2.81%
Healthcare11.55%15.52%
Consumer Defensive4.01%15.32%
Real Estate9.55%0.0%
Financial Services15.91%17.18%
Consumer Cyclical13.61%10.47%
Basic Materials5.34%3.67%

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 Dividend Appreciation Index Fund ETF Shares (VIG) has the most exposure to the Industrials sector at 17.23%. This is followed by Financial Services and Healthcare at 17.18% and 15.52% respectively. Energy (0.0%), Utilities (2.81%), and Communication Services (2.86%) only make up 5.67% of the fund’s total assets.

VIG’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Cyclical, Technology, Consumer Defensive, and Healthcare stocks at 3.67%, 10.47%, 14.93%, 15.32%, and 15.52%.

IJR is 0.08% more exposed to the Industrials sector than VIG (17.31% vs 17.23%). IJR’s exposure to Financial Services and Technology stocks is 1.27% lower and 0.61% lower respectively (15.91% vs. 17.18% and 14.32% vs. 14.93%). In total, Communication Services, Energy, and Consumer Defensive also make up 7.58% less of the fund’s holdings compared to VIG (10.60% vs. 18.18%).

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%.

VIG - Holdings

VIG HoldingsWeight
Microsoft Corp4.19%
JPMorgan Chase & Co3.8%
Johnson & Johnson3.67%
Walmart Inc3.38%
Visa Inc Class A3.22%
UnitedHealth Group Inc3.22%
The Home Depot Inc2.91%
Procter & Gamble Co2.82%
Comcast Corp Class A2.21%
Coca-Cola Co1.98%

VIG’s Top Holdings are Microsoft Corp, JPMorgan Chase & Co, Johnson & Johnson, Walmart Inc, and Visa Inc Class A at 4.19%, 3.8%, 3.67%, 3.38%, and 3.22%.

UnitedHealth Group Inc (3.22%), The Home Depot Inc (2.91%), and Procter & Gamble Co (2.82%) have a slightly smaller but still significant weight. Comcast Corp Class A and Coca-Cola Co are also represented in the VIG’s holdings at 2.21% and 1.98%.

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Risk Analysis

IJRVIG
Mean Return1.211.09
R-squared76.0392.2
Std. Deviation18.6812.25
Alpha-3.70.12
Beta1.20.86
Sharpe Ratio0.741.01
Treynor Ratio10.7714.33

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

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Sharpe Ratio of 1.01 with a Beta of 0.86 and a R-squared of 92.2. Its Mean Return is 1.09 while VIG’s Standard Deviation is 12.25. Furthermore, the fund has a Treynor Ratio of 14.33 and a Alpha of 0.12.

IJR’s Mean Return is 0.12 points higher than that of VIG and its R-squared is 16.17 points lower. With a Standard Deviation of 18.68, IJR is slightly more volatile than VIG. The Alpha and Beta of IJR are 3.82 points lower and 0.34 points higher than VIG’s Alpha and Beta.

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Performance

Annual Returns

IJR vs. VIG - Annual Returns

YearIJRVIG
202011.24%15.46%
201922.79%29.71%
2018-8.43%-2.02%
201713.2%22.22%
201626.49%11.84%
2015-2.0%-1.95%
20145.67%10.06%
201341.36%28.99%
201216.28%11.61%
20110.9%6.21%
201026.14%14.67%

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 2019 was the strongest year for VIG, returning 29.71% on an annual basis. The poorest year for VIG in the last ten years was 2018, with a yield of -2.02%. Most years the Vanguard Dividend Appreciation Index Fund ETF Shares has given investors modest returns, such as in 2012, 2016, and 2010, when gains were 11.61%, 11.84%, and 14.67% respectively.

Portfolio Growth

IJR vs. VIG - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IJR$10,000$38,80013.97%
VIG$10,000$37,95113.35%

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 VIG, the end total would have been $37,951. This equates to a $27,951 profit over 11 years and a compound annual growth rate (CAGR) of 13.35%.

IJR’s CAGR is 0.62 percentage points higher than that of VIG and as a result, would have yielded $849 more on a $10,000 investment. Thus, IJR outperformed VIG by 0.62% annually.


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