The iShares S&P 500 Growth ETF (IVW) and the iShares MSCI USA Quality Factor ETF (QUAL) are both among the Top 100 ETFs. IVW is a iShares Large Growth fund and QUAL is a iShares Large Blend fund. So, what’s the difference between IVW and QUAL? And which fund is better?
The expense ratio of IVW is 0.03 percentage points higher than QUAL’s (0.18% vs. 0.15%). IVW also has a higher exposure to the technology sector and a higher standard deviation. Overall, IVW has provided higher returns than QUAL over the past ten years.
In this article, we’ll compare IVW vs. QUAL. We’ll look at portfolio growth and holdings, as well as at their performance and fund composition. Moreover, I’ll also discuss IVW’s and QUAL’s annual returns, risk metrics, and industry exposure and examine how these affect their overall returns.
|Name||iShares S&P 500 Growth ETF||iShares MSCI USA Quality Factor ETF|
|Category||Large Growth||Large Blend|
The iShares S&P 500 Growth ETF (IVW) is a Large Growth fund that is issued by iShares. It currently has 35.72B total assets under management and has yielded an average annual return of 16.74% over the past 10 years. The fund has a dividend yield of 0.61% with an expense ratio of 0.18%.
The iShares MSCI USA Quality Factor ETF (QUAL) is a Large Blend fund that is issued by iShares. It currently has 23.93B total assets under management and has yielded an average annual return of 13.42% over the past 10 years. The fund has a dividend yield of 1.29% with an expense ratio of 0.15%.
IVW’s dividend yield is 0.68% lower than that of QUAL (0.61% vs. 1.29%). Also, IVW yielded on average 3.31% more per year over the past decade (16.74% vs. 13.42%). The expense ratio of IVW is 0.03 percentage points higher than QUAL’s (0.18% vs. 0.15%).
The iShares S&P 500 Growth ETF (IVW) has the most exposure to the Technology sector at 37.8%. This is followed by Communication Services and Consumer Cyclical at 15.44% and 15.25% respectively. Utilities (0.47%), Real Estate (1.11%), and Basic Materials (1.65%) only make up 3.23% of the fund’s total assets.
IVW’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 3.84%, 5.72%, 6.78%, 11.88%, and 15.25%.
The iShares MSCI USA Quality Factor ETF (QUAL) has the most exposure to the Technology sector at 22.52%. This is followed by Financial Services and Healthcare at 15.87% and 13.22% respectively. Basic Materials (2.35%), Utilities (2.41%), and Real Estate (2.72%) only make up 7.48% of the fund’s total assets.
QUAL’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Consumer Cyclical, Communication Services, and Healthcare stocks at 8.57%, 9.22%, 9.43%, 11.44%, and 13.22%.
IVW is 15.28% more exposed to the Technology sector than QUAL (37.8% vs 22.52%). IVW’s exposure to Communication Services and Consumer Cyclical stocks is 4.00% higher and 5.82% higher respectively (15.44% vs. 11.44% and 15.25% vs. 9.43%). In total, Utilities, Real Estate, and Basic Materials also make up 4.25% less of the fund’s holdings compared to QUAL (3.23% vs. 7.48%).
|Facebook Inc Class A||4.28%|
|Alphabet Inc Class A||4.06%|
|Alphabet Inc Class C||3.86%|
|PayPal Holdings Inc||1.62%|
IVW’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 11.46%, 10.75%, 7.14%, 4.28%, and 4.06%.
Alphabet Inc Class C (3.86%), Tesla Inc (2.65%), and NVIDIA Corp (2.43%) have a slightly smaller but still significant weight. PayPal Holdings Inc and Adobe Inc are also represented in the IVW’s holdings at 1.62% and 1.49%.
|Facebook Inc Class A||4.77%|
|Nike Inc Class B||4.05%|
|Johnson & Johnson||2.99%|
|Mastercard Inc Class A||2.72%|
|Alphabet Inc Class A||2.49%|
QUAL’s Top Holdings are Facebook Inc Class A, Nike Inc Class B, Microsoft Corp, Apple Inc, and Johnson & Johnson at 4.77%, 4.05%, 3.54%, 3.52%, and 2.99%.
BlackRock Inc (2.87%), Target Corp (2.8%), and Mastercard Inc Class A (2.72%) have a slightly smaller but still significant weight. NVIDIA Corp and Alphabet Inc Class A are also represented in the QUAL’s holdings at 2.71% and 2.49%.
The iShares S&P 500 Growth ETF (IVW) has a Mean Return of 1.44 with a Treynor Ratio of 17.24 and a Beta of 0.98. Its Alpha is 2.19 while IVW’s Sharpe Ratio is 1.21. Furthermore, the fund has a Standard Deviation of 13.77 and a R-squared of 93.82.
The iShares MSCI USA Quality Factor ETF (QUAL) has a Alpha of 0 with a Standard Deviation of 0 and a Treynor Ratio of 0. Its Beta is 0 while QUAL’s R-squared is 0. Furthermore, the fund has a Mean Return of 0 and a Sharpe Ratio of 0.
IVW’s Mean Return is 1.44 points higher than that of QUAL and its R-squared is 93.82 points higher. With a Standard Deviation of 13.77, IVW is slightly more volatile than QUAL. The Alpha and Beta of IVW are 2.19 points higher and 0.98 points higher than QUAL’s Alpha and Beta.
IVW had its best year in 2020 with an annual return of 33.21%. IVW’s worst year over the past decade yielded -0.17% and occurred in 2018. In most years the iShares S&P 500 Growth ETF provided moderate returns such as in 2012, 2014, and 2010 where annual returns amounted to 14.39%, 14.67%, and 14.84% respectively.
The year 2019 was the strongest year for QUAL, returning 34.14% on an annual basis. The poorest year for QUAL in the last ten years was 2018, with a yield of -5.77%. Most years the iShares MSCI USA Quality Factor ETF has given investors modest returns, such as in 2010, 2015, and 2016, when gains were 0.0%, 5.56%, and 9.18% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IVW would have resulted in a final balance of $28,548. This is a profit of $18,548 over 7 years and amounts to a compound annual growth rate (CAGR) of 16.74%.
With a $10,000 investment in QUAL, the end total would have been $23,251. This equates to a $13,251 profit over 7 years and a compound annual growth rate (CAGR) of 13.42%.
IVW’s CAGR is 3.31 percentage points higher than that of QUAL and as a result, would have yielded $5,297 more on a $10,000 investment. Thus, IVW outperformed QUAL by 3.31% annually.
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