The iShares Russell 1000 ETF (IWB) and the Vanguard FTSE Europe Index Fund ETF Shares (VGK) are both among the Top 100 ETFs. IWB is a iShares Large Blend fund and VGK is a Vanguard Europe Stock fund. So, what’s the difference between IWB and VGK? And which fund is better?
The expense ratio of IWB is 0.07 percentage points higher than VGK’s (0.15% vs. 0.08%). IWB also has a higher exposure to the technology sector and a lower standard deviation. Overall, IWB has provided higher returns than VGK over the past ten years.
In this article, we’ll compare IWB vs. VGK. We’ll look at performance and fund composition, as well as at their industry exposure and annual returns. Moreover, I’ll also discuss IWB’s and VGK’s portfolio growth, risk metrics, and holdings and examine how these affect their overall returns.
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Summary
| IWB | VGK | |
| Name | iShares Russell 1000 ETF | Vanguard FTSE Europe Index Fund ETF Shares |
| Category | Large Blend | Europe Stock |
| Issuer | iShares | Vanguard |
| AUM | 30.54B | 25.7B |
| Avg. Return | 14.64% | 6.68% |
| Div. Yield | 1.14% | 2.52% |
| Expense Ratio | 0.15% | 0.08% |
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 FTSE Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% with an expense ratio of 0.08%.
IWB’s dividend yield is 1.38% lower than that of VGK (1.14% vs. 2.52%). Also, IWB yielded on average 7.96% more per year over the past decade (14.64% vs. 6.68%). The expense ratio of IWB is 0.07 percentage points higher than VGK’s (0.15% vs. 0.08%).
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Fund Composition
Industry Exposure
| IWB | VGK | |
| Technology | 25.33% | 8.3% |
| Industrials | 8.88% | 15.58% |
| Energy | 2.44% | 4.3% |
| Communication Services | 10.83% | 5.09% |
| Utilities | 2.36% | 3.89% |
| Healthcare | 13.35% | 13.76% |
| Consumer Defensive | 5.97% | 11.39% |
| Real Estate | 3.34% | 2.57% |
| Financial Services | 13.64% | 15.85% |
| Consumer Cyclical | 11.85% | 11.6% |
| Basic Materials | 2.02% | 7.67% |
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 FTSE Europe Index Fund ETF Shares (VGK) has the most exposure to the Financial Services sector at 15.85%. This is followed by Industrials and Healthcare at 15.58% and 13.76% respectively. Utilities (3.89%), Energy (4.3%), and Communication Services (5.09%) only make up 13.28% of the fund’s total assets.
VGK’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.67%, 8.3%, 11.39%, 11.6%, and 13.76%.
IWB is 17.03% more exposed to the Technology sector than VGK (25.33% vs 8.3%). IWB’s exposure to Financial Services and Healthcare stocks is 2.21% lower and 0.41% lower respectively (13.64% vs. 15.85% and 13.35% vs. 13.76%). In total, Utilities, Energy, and Real Estate also make up 2.62% less of the fund’s holdings compared to VGK (8.14% vs. 10.76%).
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%.
| VGK Holdings | Weight |
| Nestle SA | 2.82% |
| ASML Holding NV | 2.2% |
| Roche Holding AG | 2.13% |
| LVMH Moet Hennessy Louis Vuitton SE | 1.58% |
| Novartis AG | 1.55% |
| AstraZeneca PLC | 1.27% |
| SAP SE | 1.25% |
| Unilever PLC | 1.23% |
| Novo Nordisk A/S B | 1.09% |
| Siemens AG | 0.96% |
VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.
AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.
Risk Analysis
| IWB | VGK | |
| Mean Return | 1.27 | 0.61 |
| R-squared | 99.73 | 92.76 |
| Std. Deviation | 13.87 | 16.65 |
| Alpha | -0.38 | 0.45 |
| Beta | 1.02 | 1.06 |
| Sharpe Ratio | 1.05 | 0.4 |
| Treynor Ratio | 14.31 | 5.12 |
The iShares Russell 1000 ETF (IWB) has a Sharpe Ratio of 1.05 with a R-squared of 99.73 and a Treynor Ratio of 14.31. Its Standard Deviation is 13.87 while IWB’s Beta is 1.02. Furthermore, the fund has a Mean Return of 1.27 and a Alpha of -0.38.
The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Alpha of 0.45 with a Treynor Ratio of 5.12 and a Sharpe Ratio of 0.4. Its Beta is 1.06 while VGK’s R-squared is 92.76. Furthermore, the fund has a Mean Return of 0.61 and a Standard Deviation of 16.65.
IWB’s Mean Return is 0.66 points higher than that of VGK and its R-squared is 6.97 points higher. With a Standard Deviation of 13.87, IWB is slightly less volatile than VGK. The Alpha and Beta of IWB are 0.83 points lower and 0.04 points lower than VGK’s Alpha and Beta.
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Performance
Annual Returns
| Year | IWB | VGK |
| 2020 | 20.8% | 6.5% |
| 2019 | 31.26% | 24.26% |
| 2018 | -4.91% | -14.79% |
| 2017 | 21.53% | 27.06% |
| 2016 | 11.91% | -0.59% |
| 2015 | 0.82% | -1.87% |
| 2014 | 13.08% | -6.56% |
| 2013 | 32.93% | 24.93% |
| 2012 | 16.27% | 21.01% |
| 2011 | 1.36% | -11.49% |
| 2010 | 15.94% | 5.01% |
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 2017 was the strongest year for VGK, returning 27.06% on an annual basis. The poorest year for VGK in the last ten years was 2018, with a yield of -14.79%. Most years the Vanguard FTSE Europe Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were -0.59%, 5.01%, and 6.5% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWB | $10,000 | $42,462 | 14.64% |
| VGK | $10,000 | $18,350 | 6.68% |
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 VGK, the end total would have been $18,350. This equates to a $8,350 profit over 11 years and a compound annual growth rate (CAGR) of 6.68%.
IWB’s CAGR is 7.96 percentage points higher than that of VGK and as a result, would have yielded $24,112 more on a $10,000 investment. Thus, IWB outperformed VGK by 7.96% annually.
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