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IVW vs. VBK: What’s The Difference?

The iShares S&P 500 Growth ETF (IVW) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. IVW is a iShares Large Growth fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between IVW and VBK? And which fund is better?

The expense ratio of IVW is 0.11 percentage points higher than VBK’s (0.18% vs. 0.07%). IVW also has a higher exposure to the technology sector and a lower standard deviation. Overall, IVW has provided higher returns than VBK over the past ten years.

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

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Summary

IVWVBK
NameiShares S&P 500 Growth ETFVanguard Small-Cap Growth Index Fund ETF Shares
CategoryLarge GrowthSmall Growth
IssueriSharesVanguard
AUM35.72B37.89B
Avg. Return16.74%16.53%
Div. Yield0.61%0.45%
Expense Ratio0.18%0.07%

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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.

IVW’s dividend yield is 0.16% higher than that of VBK (0.61% vs. 0.45%). Also, IVW yielded on average 0.21% more per year over the past decade (16.74% vs. 16.53%). The expense ratio of IVW is 0.11 percentage points higher than VBK’s (0.18% vs. 0.07%).

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Fund Composition

Industry Exposure

IVW vs. VBK - Industry Exposure

IVWVBK
Technology37.8%27.87%
Industrials5.72%13.19%
Energy0.06%1.77%
Communication Services15.44%3.24%
Utilities0.47%0.32%
Healthcare11.88%23.24%
Consumer Defensive3.84%3.83%
Real Estate1.11%7.87%
Financial Services6.78%4.05%
Consumer Cyclical15.25%12.13%
Basic Materials1.65%2.49%

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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.

VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.

IVW is 9.93% more exposed to the Technology sector than VBK (37.8% vs 27.87%). IVW’s exposure to Communication Services and Consumer Cyclical stocks is 12.20% higher and 3.12% higher respectively (15.44% vs. 3.24% and 15.25% vs. 12.13%). In total, Utilities, Real Estate, and Basic Materials also make up 7.45% less of the fund’s holdings compared to VBK (3.23% vs. 10.68%).

Holdings

IVW - Holdings

IVW HoldingsWeight
Apple Inc11.46%
Microsoft Corp10.75%
Amazon.com Inc7.14%
Facebook Inc Class A4.28%
Alphabet Inc Class A4.06%
Alphabet Inc Class C3.86%
Tesla Inc2.65%
NVIDIA Corp2.43%
PayPal Holdings Inc1.62%
Adobe Inc1.49%

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%.

VBK - Holdings

VBK HoldingsWeight
Charles River Laboratories International Inc0.78%
Pool Corp0.73%
Bio-Techne Corp0.73%
Avantor Inc0.73%
PerkinElmer Inc0.72%
Entegris Inc0.7%
PTC Inc0.62%
Fair Isaac Corp0.57%
Bill.com Holdings Inc Ordinary Shares0.56%
Avalara Inc0.55%

VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.

Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.

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Risk Analysis

IVWVBK
Mean Return1.441.22
R-squared93.8280.56
Std. Deviation13.7717.95
Alpha2.19-2.81
Beta0.981.18
Sharpe Ratio1.210.78
Treynor Ratio17.2411.18

The iShares S&P 500 Growth ETF (IVW) has a R-squared of 93.82 with a Alpha of 2.19 and a Standard Deviation of 13.77. Its Mean Return is 1.44 while IVW’s Beta is 0.98. Furthermore, the fund has a Sharpe Ratio of 1.21 and a Treynor Ratio of 17.24.

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a R-squared of 80.56 with a Beta of 1.18 and a Alpha of -2.81. Its Treynor Ratio is 11.18 while VBK’s Sharpe Ratio is 0.78. Furthermore, the fund has a Mean Return of 1.22 and a Standard Deviation of 17.95.

IVW’s Mean Return is 0.22 points higher than that of VBK and its R-squared is 13.26 points higher. With a Standard Deviation of 13.77, IVW is slightly less volatile than VBK. The Alpha and Beta of IVW are 5.00 points higher and 0.20 points lower than VBK’s Alpha and Beta.

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Performance

Annual Returns

IVW vs. VBK - Annual Returns

YearIVWVBK
202033.21%35.29%
201930.91%32.75%
2018-0.17%-5.68%
201727.2%21.9%
20166.74%10.74%
20155.33%-2.51%
201414.67%4.02%
201332.48%38.18%
201214.39%17.67%
20114.49%-1.43%
201014.84%30.87%

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 2013 was the strongest year for VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.

Portfolio Growth

IVW vs. VBK - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IVW$10,000$51,91516.74%
VBK$10,000$48,63916.53%

A $10,000 investment in IVW would have resulted in a final balance of $51,915. This is a profit of $41,915 over 11 years and amounts to a compound annual growth rate (CAGR) of 16.74%.

With a $10,000 investment in VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.

IVW’s CAGR is 0.21 percentage points higher than that of VBK and as a result, would have yielded $3,276 more on a $10,000 investment. Thus, IVW outperformed VBK by 0.21% annually.


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