IWB vs. VBR: What’s The Difference?

The iShares Russell 1000 ETF (IWB) and the Vanguard Small-Cap Value Index Fund ETF Shares (VBR) are both among the Top 100 ETFs. IWB is a iShares Large Blend fund and VBR is a Vanguard Small Value fund. So, what’s the difference between IWB and VBR? And which fund is better?

The expense ratio of IWB is 0.08 percentage points higher than VBR’s (0.15% vs. 0.07%). IWB also has a higher exposure to the technology sector and a lower standard deviation. Overall, IWB has provided higher returns than VBR over the past ten years.

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

Summary

IWB VBR
Name iShares Russell 1000 ETF Vanguard Small-Cap Value Index Fund ETF Shares
Category Large Blend Small Value
Issuer iShares Vanguard
AUM 30.54B 48.08B
Avg. Return 14.64% 12.28%
Div. Yield 1.14% 1.6%
Expense Ratio 0.15% 0.07%

The iShares Russell 1000 ETF (IWB) is a Large Blend fund that is issued by iShares. It currently has 30.54B total assets under management and has yielded an average annual return of 14.64% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.15%.

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.

IWB’s dividend yield is 0.46% lower than that of VBR (1.14% vs. 1.6%). Also, IWB yielded on average 2.35% more per year over the past decade (14.64% vs. 12.28%). The expense ratio of IWB is 0.08 percentage points higher than VBR’s (0.15% vs. 0.07%).

Fund Composition

Industry Exposure

IWB vs. VBR - Industry Exposure

IWB VBR
Technology 25.33% 8.39%
Industrials 8.88% 18.44%
Energy 2.44% 5.15%
Communication Services 10.83% 1.77%
Utilities 2.36% 3.65%
Healthcare 13.35% 7.16%
Consumer Defensive 5.97% 4.36%
Real Estate 3.34% 10.92%
Financial Services 13.64% 20.04%
Consumer Cyclical 11.85% 13.82%
Basic Materials 2.02% 6.31%

The iShares Russell 1000 ETF (IWB) has the most exposure to the Technology sector at 25.33%. This is followed by Financial Services and Healthcare at 13.64% and 13.35% respectively. Utilities (2.36%), Energy (2.44%), and Real Estate (3.34%) only make up 8.14% of the fund’s total assets.

IWB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.88%, 10.83%, 11.85%, and 13.35%.

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.

VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.

IWB is 16.94% more exposed to the Technology sector than VBR (25.33% vs 8.39%). IWB’s exposure to Financial Services and Healthcare stocks is 6.40% lower and 6.19% higher respectively (13.64% vs. 20.04% and 13.35% vs. 7.16%). In total, Utilities, Energy, and Real Estate also make up 11.58% less of the fund’s holdings compared to VBR (8.14% vs. 19.72%).

Holdings

IWB - Holdings

IWB Holdings Weight
Apple Inc 5.45%
Microsoft Corp 5.11%
Amazon.com Inc 3.43%
Facebook Inc Class A 2.03%
Alphabet Inc Class A 1.93%
Alphabet Inc Class C 1.82%
Tesla Inc 1.27%
Berkshire Hathaway Inc Class B 1.24%
NVIDIA Corp 1.11%
JPMorgan Chase & Co 1.09%

IWB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.45%, 5.11%, 3.43%, 2.03%, and 1.93%.

Alphabet Inc Class C (1.82%), Tesla Inc (1.27%), and Berkshire Hathaway Inc Class B (1.24%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the IWB’s holdings at 1.11% and 1.09%.

VBR - Holdings

VBR Holdings Weight
Diamondback Energy Inc 0.55%
VICI Properties Inc Ordinary Shares 0.54%
IDEX Corp 0.54%
Nuance Communications Inc 0.5%
Molina Healthcare Inc 0.48%
Signature Bank 0.46%
Novavax Inc 0.44%
Howmet Aerospace Inc 0.44%
Apollo Global Management Inc Class A 0.42%
Brown & Brown Inc 0.41%

VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.

Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.

Risk Analysis

IWB VBR
Mean Return 1.27 1.08
R-squared 99.73 82.2
Std. Deviation 13.87 18.37
Alpha -0.38 -5.09
Beta 1.02 1.23
Sharpe Ratio 1.05 0.67
Treynor Ratio 14.31 9.15

The iShares Russell 1000 ETF (IWB) has a Beta of 1.02 with a Standard Deviation of 13.87 and a Mean Return of 1.27. Its Treynor Ratio is 14.31 while IWB’s Sharpe Ratio is 1.05. Furthermore, the fund has a R-squared of 99.73 and a Alpha of -0.38.

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Standard Deviation of 18.37 with a Mean Return of 1.08 and a Treynor Ratio of 9.15. Its R-squared is 82.2 while VBR’s Sharpe Ratio is 0.67. Furthermore, the fund has a Alpha of -5.09 and a Beta of 1.23.

IWB’s Mean Return is 0.19 points higher than that of VBR and its R-squared is 17.53 points higher. With a Standard Deviation of 13.87, IWB is slightly less volatile than VBR. The Alpha and Beta of IWB are 4.71 points higher and 0.21 points lower than VBR’s Alpha and Beta.

Performance

Annual Returns

IWB vs. VBR - Annual Returns

Year IWB VBR
2020 20.8% 5.82%
2019 31.26% 22.76%
2018 -4.91% -12.22%
2017 21.53% 11.79%
2016 11.91% 24.8%
2015 0.82% -4.67%
2014 13.08% 10.55%
2013 32.93% 36.57%
2012 16.27% 18.78%
2011 1.36% -4.05%
2010 15.94% 24.97%

IWB had its best year in 2013 with an annual return of 32.93%. IWB’s worst year over the past decade yielded -4.91% and occurred in 2018. In most years the iShares Russell 1000 ETF provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.08%, 15.94%, and 16.27% respectively.

The year 2013 was the strongest year for VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% respectively.

Portfolio Growth

IWB vs. VBR - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWB $10,000 $42,462 14.64%
VBR $10,000 $32,611 12.28%

A $10,000 investment in IWB would have resulted in a final balance of $42,462. This is a profit of $32,462 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.64%.

With a $10,000 investment in VBR, the end total would have been $32,611. This equates to a $22,611 profit over 11 years and a compound annual growth rate (CAGR) of 12.28%.

IWB’s CAGR is 2.35 percentage points higher than that of VBR and as a result, would have yielded $9,851 more on a $10,000 investment. Thus, IWB outperformed VBR by 2.35% annually.


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