The iShares Russell 1000 Value ETF (IWD) and the iShares MSCI USA Quality Factor ETF (QUAL) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and QUAL is a iShares Large Blend fund. So, what’s the difference between IWD and QUAL? And which fund is better?
The expense ratio of IWD is 0.04 percentage points higher than QUAL’s (0.19% vs. 0.15%). IWD also has a higher exposure to the financial services sector and a higher standard deviation. Overall, IWD has provided lower returns than QUAL over the past ten years.
In this article, we’ll compare IWD vs. QUAL. We’ll look at portfolio growth and risk metrics, as well as at their performance and fund composition. Moreover, I’ll also discuss IWD’s and QUAL’s holdings, industry exposure, and annual returns and examine how these affect their overall returns.
Summary
| IWD | QUAL | |
| Name | iShares Russell 1000 Value ETF | iShares MSCI USA Quality Factor ETF |
| Category | Large Value | Large Blend |
| Issuer | iShares | iShares |
| AUM | 54.1B | 23.93B |
| Avg. Return | 11.40% | 13.42% |
| Div. Yield | 1.57% | 1.29% |
| Expense Ratio | 0.19% | 0.15% |
The iShares Russell 1000 Value ETF (IWD) is a Large Value fund that is issued by iShares. It currently has 54.1B total assets under management and has yielded an average annual return of 11.40% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.19%.
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%.
IWD’s dividend yield is 0.28% higher than that of QUAL (1.57% vs. 1.29%). Also, IWD yielded on average 2.02% less per year over the past decade (11.40% vs. 13.42%). The expense ratio of IWD is 0.04 percentage points higher than QUAL’s (0.19% vs. 0.15%).
Fund Composition
Industry Exposure
| IWD | QUAL | |
| Technology | 10.28% | 22.52% |
| Industrials | 11.77% | 9.22% |
| Energy | 4.76% | 2.24% |
| Communication Services | 8.67% | 11.44% |
| Utilities | 4.88% | 2.41% |
| Healthcare | 17.78% | 13.22% |
| Consumer Defensive | 7.76% | 8.57% |
| Real Estate | 4.94% | 2.72% |
| Financial Services | 20.43% | 15.87% |
| Consumer Cyclical | 5.62% | 9.43% |
| Basic Materials | 3.1% | 2.35% |
The iShares Russell 1000 Value ETF (IWD) has the most exposure to the Financial Services sector at 20.43%. This is followed by Healthcare and Industrials at 17.78% and 11.77% respectively. Energy (4.76%), Utilities (4.88%), and Real Estate (4.94%) only make up 14.58% of the fund’s total assets.
IWD’s mid-section with moderate exposure is comprised of Consumer Cyclical, Consumer Defensive, Communication Services, Technology, and Industrials stocks at 5.62%, 7.76%, 8.67%, 10.28%, and 11.77%.
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%.
IWD is 4.56% more exposed to the Financial Services sector than QUAL (20.43% vs 15.87%). IWD’s exposure to Healthcare and Industrials stocks is 4.56% higher and 2.55% higher respectively (17.78% vs. 13.22% and 11.77% vs. 9.22%). In total, Energy, Utilities, and Real Estate also make up 7.21% more of the fund’s holdings compared to QUAL (14.58% vs. 7.37%).
Holdings
| IWD Holdings | Weight |
| Berkshire Hathaway Inc Class B | 2.58% |
| JPMorgan Chase & Co | 2.25% |
| Johnson & Johnson | 2.24% |
| UnitedHealth Group Inc | 1.78% |
| Procter & Gamble Co | 1.71% |
| The Walt Disney Co | 1.5% |
| Bank of America Corp | 1.43% |
| Comcast Corp Class A | 1.33% |
| Exxon Mobil Corp | 1.2% |
| Pfizer Inc | 1.18% |
IWD’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.58%, 2.25%, 2.24%, 1.78%, and 1.71%.
The Walt Disney Co (1.5%), Bank of America Corp (1.43%), and Comcast Corp Class A (1.33%) have a slightly smaller but still significant weight. Exxon Mobil Corp and Pfizer Inc are also represented in the IWD’s holdings at 1.2% and 1.18%.
| QUAL Holdings | Weight |
| Facebook Inc Class A | 4.77% |
| Nike Inc Class B | 4.05% |
| Microsoft Corp | 3.54% |
| Apple Inc | 3.52% |
| Johnson & Johnson | 2.99% |
| BlackRock Inc | 2.87% |
| Target Corp | 2.8% |
| Mastercard Inc Class A | 2.72% |
| NVIDIA Corp | 2.71% |
| 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%.
Risk Analysis
| IWD | QUAL | |
| Mean Return | 1.03 | 0 |
| R-squared | 92.38 | 0 |
| Std. Deviation | 14.35 | 0 |
| Alpha | -3.23 | 0 |
| Beta | 1.02 | 0 |
| Sharpe Ratio | 0.81 | 0 |
| Treynor Ratio | 11.06 | 0 |
The iShares Russell 1000 Value ETF (IWD) has a Alpha of -3.23 with a Beta of 1.02 and a Treynor Ratio of 11.06. Its Mean Return is 1.03 while IWD’s Sharpe Ratio is 0.81. Furthermore, the fund has a R-squared of 92.38 and a Standard Deviation of 14.35.
The iShares MSCI USA Quality Factor ETF (QUAL) has a Alpha of 0 with a R-squared of 0 and a Sharpe Ratio of 0. Its Mean Return is 0 while QUAL’s Beta is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Standard Deviation of 0.
IWD’s Mean Return is 1.03 points higher than that of QUAL and its R-squared is 92.38 points higher. With a Standard Deviation of 14.35, IWD is slightly more volatile than QUAL. The Alpha and Beta of IWD are 3.23 points lower and 1.02 points higher than QUAL’s Alpha and Beta.
Performance
Annual Returns
| Year | IWD | QUAL |
| 2020 | 2.67% | 16.96% |
| 2019 | 26.34% | 34.14% |
| 2018 | -8.4% | -5.77% |
| 2017 | 13.47% | 22.26% |
| 2016 | 17.09% | 9.18% |
| 2015 | -3.95% | 5.56% |
| 2014 | 13.21% | 11.62% |
| 2013 | 32.18% | 0.0% |
| 2012 | 17.28% | 0.0% |
| 2011 | 0.21% | 0.0% |
| 2010 | 15.3% | 0.0% |
IWD had its best year in 2013 with an annual return of 32.18%. IWD’s worst year over the past decade yielded -8.4% and occurred in 2018. In most years the iShares Russell 1000 Value ETF provided moderate returns such as in 2014, 2017, and 2010 where annual returns amounted to 13.21%, 13.47%, and 15.3% 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.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWD | $10,000 | $17,165 | 11.40% |
| QUAL | $10,000 | $23,251 | 13.42% |
A $10,000 investment in IWD would have resulted in a final balance of $17,165. This is a profit of $7,165 over 7 years and amounts to a compound annual growth rate (CAGR) of 11.40%.
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%.
IWD’s CAGR is 2.02 percentage points lower than that of QUAL and as a result, would have yielded $6,086 less on a $10,000 investment. Thus, IWD performed worse than QUAL by 2.02% annually.
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