IVW vs. VHT: What’s The Difference?

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

The expense ratio of IVW is 0.08 percentage points higher than VHT’s (0.18% vs. 0.1%). IVW also has a higher exposure to the technology sector and a higher standard deviation. Overall, IVW has provided higher returns than VHT over the past ten years.

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

Summary

IVW VHT
Name iShares S&P 500 Growth ETF Vanguard Health Care Index Fund ETF Shares
Category Large Growth Health
Issuer iShares Vanguard
AUM 35.72B 17.94B
Avg. Return 16.74% 16.04%
Div. Yield 0.61% 1.15%
Expense Ratio 0.18% 0.1%

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 Health Care Index Fund ETF Shares (VHT) is a Health fund that is issued by Vanguard. It currently has 17.94B total assets under management and has yielded an average annual return of 16.04% over the past 10 years. The fund has a dividend yield of 1.15% with an expense ratio of 0.1%.

IVW’s dividend yield is 0.54% lower than that of VHT (0.61% vs. 1.15%). Also, IVW yielded on average 0.70% more per year over the past decade (16.74% vs. 16.04%). The expense ratio of IVW is 0.08 percentage points higher than VHT’s (0.18% vs. 0.1%).

Fund Composition

Industry Exposure

IVW vs. VHT - Industry Exposure

IVW VHT
Technology 37.8% 0.05%
Industrials 5.72% 0.05%
Energy 0.06% 0.0%
Communication Services 15.44% 0.0%
Utilities 0.47% 0.0%
Healthcare 11.88% 99.57%
Consumer Defensive 3.84% 0.0%
Real Estate 1.11% 0.0%
Financial Services 6.78% 0.02%
Consumer Cyclical 15.25% 0.0%
Basic Materials 1.65% 0.31%

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 Health Care Index Fund ETF Shares (VHT) has the most exposure to the Healthcare sector at 99.57%. This is followed by Basic Materials and Technology at 0.31% and 0.05% respectively. Real Estate (0.0%), Consumer Defensive (0.0%), and Utilities (0.0%) only make up 0.00% of the fund’s total assets.

VHT’s mid-section with moderate exposure is comprised of Communication Services, Energy, Financial Services, Industrials, and Technology stocks at 0.0%, 0.0%, 0.02%, 0.05%, and 0.05%.

IVW is 37.75% more exposed to the Technology sector than VHT (37.8% vs 0.05%). IVW’s exposure to Communication Services and Consumer Cyclical stocks is 15.44% higher and 15.25% higher respectively (15.44% vs. 0.0% and 15.25% vs. 0.0%). In total, Utilities, Real Estate, and Basic Materials also make up 2.92% more of the fund’s holdings compared to VHT (3.23% vs. 0.31%).

Holdings

IVW - Holdings

IVW Holdings Weight
Apple Inc 11.46%
Microsoft Corp 10.75%
Amazon.com Inc 7.14%
Facebook Inc Class A 4.28%
Alphabet Inc Class A 4.06%
Alphabet Inc Class C 3.86%
Tesla Inc 2.65%
NVIDIA Corp 2.43%
PayPal Holdings Inc 1.62%
Adobe Inc 1.49%

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%.

VHT - Holdings

VHT Holdings Weight
Johnson & Johnson 7.34%
UnitedHealth Group Inc 6.44%
Pfizer Inc 3.7%
Abbott Laboratories 3.48%
Thermo Fisher Scientific Inc 3.37%
AbbVie Inc 3.37%
Merck & Co Inc 3.33%
Eli Lilly and Co 3.17%
Danaher Corp 2.91%
Medtronic PLC 2.83%

VHT’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and Thermo Fisher Scientific Inc at 7.34%, 6.44%, 3.7%, 3.48%, and 3.37%.

AbbVie Inc (3.37%), Merck & Co Inc (3.33%), and Eli Lilly and Co (3.17%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the VHT’s holdings at 2.91% and 2.83%.

Risk Analysis

IVW VHT
Mean Return 1.44 1.33
R-squared 93.82 59.86
Std. Deviation 13.77 13.58
Alpha 2.19 7.99
Beta 0.98 0.75
Sharpe Ratio 1.21 1.13
Treynor Ratio 17.24 20.74

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

The Vanguard Health Care Index Fund ETF Shares (VHT) has a Mean Return of 1.33 with a Alpha of 7.99 and a Standard Deviation of 13.58. Its R-squared is 59.86 while VHT’s Treynor Ratio is 20.74. Furthermore, the fund has a Beta of 0.75 and a Sharpe Ratio of 1.13.

IVW’s Mean Return is 0.11 points higher than that of VHT and its R-squared is 33.96 points higher. With a Standard Deviation of 13.77, IVW is slightly more volatile than VHT. The Alpha and Beta of IVW are 5.80 points lower and 0.23 points higher than VHT’s Alpha and Beta.

Performance

Annual Returns

IVW vs. VHT - Annual Returns

Year IVW VHT
2020 33.21% 18.21%
2019 30.91% 21.97%
2018 -0.17% 5.55%
2017 27.2% 23.34%
2016 6.74% -3.33%
2015 5.33% 7.22%
2014 14.67% 25.38%
2013 32.48% 42.67%
2012 14.39% 19.1%
2011 4.49% 10.57%
2010 14.84% 5.75%

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 VHT, returning 42.67% on an annual basis. The poorest year for VHT in the last ten years was 2016, with a yield of -3.33%. Most years the Vanguard Health Care Index Fund ETF Shares has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 10.57%, 18.21%, and 19.1% respectively.

Portfolio Growth

IVW vs. VHT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IVW $10,000 $51,915 16.74%
VHT $10,000 $48,464 16.04%

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 VHT, the end total would have been $48,464. This equates to a $38,464 profit over 11 years and a compound annual growth rate (CAGR) of 16.04%.

IVW’s CAGR is 0.70 percentage points higher than that of VHT and as a result, would have yielded $3,451 more on a $10,000 investment. Thus, IVW outperformed VHT by 0.70% annually.


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