IJR vs. VT: What’s The Difference?

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

The expense ratio of IJR is 0.02 percentage points lower than VT’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 VT over the past ten years.

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

Summary

IJR VT
Name iShares Core S&P Small-Cap ETF Vanguard Total World Stock Index Fund ETF Shares
Category Small Blend N/A
Issuer iShares Vanguard
AUM 68.64B 30.44B
Avg. Return 13.97% 10.42%
Div. Yield 0.96% 1.65%
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 Total World Stock Index Fund ETF Shares (VT) is a N/A fund that is issued by Vanguard. It currently has 30.44B total assets under management and has yielded an average annual return of 10.42% over the past 10 years. The fund has a dividend yield of 1.65% with an expense ratio of 0.08%.

IJR’s dividend yield is 0.69% lower than that of VT (0.96% vs. 1.65%). Also, IJR yielded on average 3.55% more per year over the past decade (13.97% vs. 10.42%). The expense ratio of IJR is 0.02 percentage points lower than VT’s (0.06% vs. 0.08%).

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).

Fund Composition

Industry Exposure

IJR vs. VT - Industry Exposure

IJR VT
Technology 14.32% 19.63%
Industrials 17.31% 10.7%
Energy 4.0% 3.48%
Communication Services 2.59% 9.02%
Utilities 1.8% 2.6%
Healthcare 11.55% 11.58%
Consumer Defensive 4.01% 6.71%
Real Estate 9.55% 3.64%
Financial Services 15.91% 15.36%
Consumer Cyclical 13.61% 12.32%
Basic Materials 5.34% 4.97%

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 Total World Stock Index Fund ETF Shares (VT) has the most exposure to the Technology sector at 19.63%. This is followed by Financial Services and Consumer Cyclical at 15.36% and 12.32% respectively. Energy (3.48%), Real Estate (3.64%), and Basic Materials (4.97%) only make up 12.09% of the fund’s total assets.

VT’s mid-section with moderate exposure is comprised of Consumer Defensive, Communication Services, Industrials, Healthcare, and Consumer Cyclical stocks at 6.71%, 9.02%, 10.7%, 11.58%, and 12.32%.

IJR is 6.61% more exposed to the Industrials sector than VT (17.31% vs 10.7%). IJR’s exposure to Financial Services and Technology stocks is 0.55% higher and 5.31% lower respectively (15.91% vs. 15.36% and 14.32% vs. 19.63%). In total, Communication Services, Energy, and Consumer Defensive also make up 8.61% less of the fund’s holdings compared to VT (10.60% vs. 19.21%).

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%.

VT - Holdings

VT Holdings Weight
Apple Inc 2.85%
Microsoft Corp 2.71%
Amazon.com Inc 1.98%
Facebook Inc Class A 1.1%
Alphabet Inc Class A 0.97%
Alphabet Inc Class C 0.95%
Tesla Inc 0.7%
NVIDIA Corp 0.64%
JPMorgan Chase & Co 0.62%
Tencent Holdings Ltd 0.6%

VT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 2.85%, 2.71%, 1.98%, 1.1%, and 0.97%.

Alphabet Inc Class C (0.95%), Tesla Inc (0.7%), and NVIDIA Corp (0.64%) have a slightly smaller but still significant weight. JPMorgan Chase & Co and Tencent Holdings Ltd are also represented in the VT’s holdings at 0.62% and 0.6%.

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).

Risk Analysis

IJR VT
Mean Return 1.21 0.9
R-squared 76.03 99.35
Std. Deviation 18.68 14.19
Alpha -3.7 0.2
Beta 1.2 1.01
Sharpe Ratio 0.74 0.71
Treynor Ratio 10.77 9.5

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

The Vanguard Total World Stock Index Fund ETF Shares (VT) has a R-squared of 99.35 with a Standard Deviation of 14.19 and a Treynor Ratio of 9.5. Its Mean Return is 0.9 while VT’s Alpha is 0.2. Furthermore, the fund has a Beta of 1.01 and a Sharpe Ratio of 0.71.

IJR’s Mean Return is 0.31 points higher than that of VT and its R-squared is 23.32 points lower. With a Standard Deviation of 18.68, IJR is slightly more volatile than VT. The Alpha and Beta of IJR are 3.90 points lower and 0.19 points higher than VT’s Alpha and Beta.

BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Coinbase - the simplest and cheapest broker I've found! Click here to read more (link to Coinbase).

Performance

Annual Returns

IJR vs. VT - Annual Returns

Year IJR VT
2020 11.24% 16.74%
2019 22.79% 26.8%
2018 -8.43% -9.67%
2017 13.2% 24.19%
2016 26.49% 8.77%
2015 -2.0% -1.88%
2014 5.67% 3.97%
2013 41.36% 22.98%
2012 16.28% 17.33%
2011 0.9% -7.71%
2010 26.14% 13.05%

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 VT, returning 26.8% on an annual basis. The poorest year for VT in the last ten years was 2018, with a yield of -9.67%. Most years the Vanguard Total World Stock Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 8.77%, 13.05%, and 16.74% respectively.

Portfolio Growth

IJR vs. VT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IJR $10,000 $38,800 13.97%
VT $10,000 $27,739 10.42%

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 VT, the end total would have been $27,739. This equates to a $17,739 profit over 11 years and a compound annual growth rate (CAGR) of 10.42%.

IJR’s CAGR is 3.55 percentage points higher than that of VT and as a result, would have yielded $11,061 more on a $10,000 investment. Thus, IJR outperformed VT by 3.55% annually.


Current recommendations:

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) 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!

2) 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!).

3) If you are interested in crypto, check out Coinbase. I've started allocating a small amount of assets to the growing crypto space and Coinbase has just been a breeze to use. Once you register, make sure to also open an Coinbase Pro account to buy crypto at the lowest fees on the market (just 0.1%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply