The iShares Core S&P Small-Cap ETF (IJR) and the Vanguard Mid-Cap Index Fund ETF Shares (VO) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and VO is a Vanguard Mid-Cap Blend fund. So, what’s the difference between IJR and VO? And which fund is better?
The expense ratio of IJR is 0.02 percentage points higher than VO’s (0.06% vs. 0.04%). IJR also has a higher exposure to the industrials sector and a higher standard deviation. Overall, IJR has provided lower returns than VO over the past ten years.
In this article, we’ll compare IJR vs. VO. We’ll look at holdings and risk metrics, as well as at their industry exposure and portfolio growth. Moreover, I’ll also discuss IJR’s and VO’s performance, annual returns, and fund composition and examine how these affect their overall returns.
|Name||iShares Core S&P Small-Cap ETF||Vanguard Mid-Cap Index Fund ETF Shares|
|Category||Small Blend||Mid-Cap Blend|
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 Mid-Cap Index Fund ETF Shares (VO) is a Mid-Cap Blend fund that is issued by Vanguard. It currently has 154.08B total assets under management and has yielded an average annual return of 14.34% over the past 10 years. The fund has a dividend yield of 1.23% with an expense ratio of 0.04%.
IJR’s dividend yield is 0.27% lower than that of VO (0.96% vs. 1.23%). Also, IJR yielded on average 0.37% less per year over the past decade (13.97% vs. 14.34%). The expense ratio of IJR is 0.02 percentage points higher than VO’s (0.06% vs. 0.04%).
FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).
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 Mid-Cap Index Fund ETF Shares (VO) has the most exposure to the Technology sector at 22.01%. This is followed by Healthcare and Consumer Cyclical at 13.03% and 12.12% respectively. Basic Materials (3.36%), Energy (3.82%), and Utilities (5.12%) only make up 12.30% of the fund’s total assets.
VO’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Industrials, and Consumer Cyclical stocks at 5.61%, 8.67%, 11.08%, 11.92%, and 12.12%.
IJR is 5.39% more exposed to the Industrials sector than VO (17.31% vs 11.92%). IJR’s exposure to Financial Services and Technology stocks is 4.83% higher and 7.69% lower respectively (15.91% vs. 11.08% and 14.32% vs. 22.01%). In total, Communication Services, Energy, and Consumer Defensive also make up 2.08% less of the fund’s holdings compared to VO (10.60% vs. 12.68%).
|BlackRock Cash Funds Treasury SL Agency||1.08%|
|GameStop Corp Class A||0.86%|
|Power Integrations Inc||0.57%|
|Chart Industries Inc||0.53%|
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%.
|IDEXX Laboratories Inc||0.78%|
|Marvell Technology Inc||0.68%|
|IQVIA Holdings Inc||0.68%|
|Chipotle Mexican Grill Inc||0.63%|
|Veeva Systems Inc Class A||0.62%|
|Digital Realty Trust Inc||0.62%|
|Carrier Global Corp Ordinary Shares||0.61%|
VO’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Marvell Technology Inc, IQVIA Holdings Inc, and Chipotle Mexican Grill Inc at 0.78%, 0.75%, 0.68%, 0.68%, and 0.63%.
Veeva Systems Inc Class A (0.62%), Digital Realty Trust Inc (0.62%), and Centene Corp (0.62%) have a slightly smaller but still significant weight. Aptiv PLC and Carrier Global Corp Ordinary Shares are also represented in the VO’s holdings at 0.62% and 0.61%.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
The iShares Core S&P Small-Cap ETF (IJR) has a Sharpe Ratio of 0.74 with a Alpha of -3.7 and a Mean Return of 1.21. Its R-squared is 76.03 while IJR’s Beta is 1.2. Furthermore, the fund has a Standard Deviation of 18.68 and a Treynor Ratio of 10.77.
The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Treynor Ratio of 11.32 with a Standard Deviation of 15.65 and a R-squared of 92.22. Its Alpha is -2.71 while VO’s Mean Return is 1.14. Furthermore, the fund has a Beta of 1.11 and a Sharpe Ratio of 0.83.
IJR’s Mean Return is 0.07 points higher than that of VO and its R-squared is 16.19 points lower. With a Standard Deviation of 18.68, IJR is slightly more volatile than VO. The Alpha and Beta of IJR are 0.99 points lower and 0.09 points higher than VO’s Alpha and Beta.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
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 VO, returning 35.15% on an annual basis. The poorest year for VO in the last ten years was 2018, with a yield of -9.21%. Most years the Vanguard Mid-Cap Index Fund ETF Shares has given investors modest returns, such as in 2014, 2012, and 2020, when gains were 13.76%, 15.98%, and 18.22% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 VO, the end total would have been $40,404. This equates to a $30,404 profit over 11 years and a compound annual growth rate (CAGR) of 14.34%.
IJR’s CAGR is 0.37 percentage points lower than that of VO and as a result, would have yielded $1,604 less on a $10,000 investment. Thus, IJR performed worse than VO by 0.37% annually.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.