The iShares Russell 1000 Value ETF (IWD) and the Vanguard Small-Cap Index Fund ETF Shares (VB) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and VB is a Vanguard Small Blend fund. So, what’s the difference between IWD and VB? And which fund is better?
The expense ratio of IWD is 0.14 percentage points higher than VB’s (0.19% vs. 0.05%). IWD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, IWD has provided lower returns than VB over the past ten years.
In this article, we’ll compare IWD vs. VB. We’ll look at fund composition and industry exposure, as well as at their portfolio growth and performance. Moreover, I’ll also discuss IWD’s and VB’s risk metrics, holdings, and annual returns and examine how these affect their overall returns.
Summary
| IWD | VB | |
| Name | iShares Russell 1000 Value ETF | Vanguard Small-Cap Index Fund ETF Shares |
| Category | Large Value | Small Blend |
| Issuer | iShares | Vanguard |
| AUM | 54.1B | 137.72B |
| Avg. Return | 11.40% | 14.25% |
| Div. Yield | 1.57% | 1.14% |
| Expense Ratio | 0.19% | 0.05% |
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 Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.05%.
IWD’s dividend yield is 0.43% higher than that of VB (1.57% vs. 1.14%). Also, IWD yielded on average 2.85% less per year over the past decade (11.40% vs. 14.25%). The expense ratio of IWD is 0.14 percentage points higher than VB’s (0.19% vs. 0.05%).
Fund Composition
Industry Exposure
| IWD | VB | |
| Technology | 10.28% | 16.85% |
| Industrials | 11.77% | 16.11% |
| Energy | 4.76% | 3.67% |
| Communication Services | 8.67% | 2.4% |
| Utilities | 4.88% | 2.19% |
| Healthcare | 17.78% | 14.34% |
| Consumer Defensive | 7.76% | 4.14% |
| Real Estate | 4.94% | 9.56% |
| Financial Services | 20.43% | 13.06% |
| Consumer Cyclical | 5.62% | 13.03% |
| Basic Materials | 3.1% | 4.63% |
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 Vanguard Small-Cap Index Fund ETF Shares (VB) has the most exposure to the Technology sector at 16.85%. This is followed by Industrials and Healthcare at 16.11% and 14.34% respectively. Communication Services (2.4%), Energy (3.67%), and Consumer Defensive (4.14%) only make up 10.21% of the fund’s total assets.
VB’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Healthcare stocks at 4.63%, 9.56%, 13.03%, 13.06%, and 14.34%.
IWD is 7.37% more exposed to the Financial Services sector than VB (20.43% vs 13.06%). IWD’s exposure to Healthcare and Industrials stocks is 3.44% higher and 4.34% lower respectively (17.78% vs. 14.34% and 11.77% vs. 16.11%). In total, Energy, Utilities, and Real Estate also make up 0.84% less of the fund’s holdings compared to VB (14.58% vs. 15.42%).
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%.
| VB Holdings | Weight |
| Charles River Laboratories International Inc | 0.34% |
| Pool Corp | 0.32% |
| Bio-Techne Corp | 0.32% |
| Avantor Inc | 0.32% |
| PerkinElmer Inc | 0.31% |
| Diamondback Energy Inc | 0.31% |
| VICI Properties Inc Ordinary Shares | 0.3% |
| IDEX Corp | 0.3% |
| Entegris Inc | 0.3% |
| Novavax Inc | 0.29% |
VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.
Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.
Risk Analysis
| IWD | VB | |
| Mean Return | 1.03 | 1.15 |
| R-squared | 92.38 | 85.03 |
| Std. Deviation | 14.35 | 17.82 |
| Alpha | -3.23 | -4.02 |
| Beta | 1.02 | 1.21 |
| Sharpe Ratio | 0.81 | 0.74 |
| Treynor Ratio | 11.06 | 10.15 |
The iShares Russell 1000 Value ETF (IWD) has a Beta of 1.02 with a Alpha of -3.23 and a Standard Deviation of 14.35. Its R-squared is 92.38 while IWD’s Mean Return is 1.03. Furthermore, the fund has a Treynor Ratio of 11.06 and a Sharpe Ratio of 0.81.
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Beta of 1.21 with a Mean Return of 1.15 and a R-squared of 85.03. Its Alpha is -4.02 while VB’s Treynor Ratio is 10.15. Furthermore, the fund has a Sharpe Ratio of 0.74 and a Standard Deviation of 17.82.
IWD’s Mean Return is 0.12 points lower than that of VB and its R-squared is 7.35 points higher. With a Standard Deviation of 14.35, IWD is slightly less volatile than VB. The Alpha and Beta of IWD are 0.79 points higher and 0.19 points lower than VB’s Alpha and Beta.
Performance
Annual Returns
| Year | IWD | VB |
| 2020 | 2.67% | 19.08% |
| 2019 | 26.34% | 27.37% |
| 2018 | -8.4% | -9.3% |
| 2017 | 13.47% | 16.24% |
| 2016 | 17.09% | 18.31% |
| 2015 | -3.95% | -3.65% |
| 2014 | 13.21% | 7.51% |
| 2013 | 32.18% | 37.8% |
| 2012 | 17.28% | 18.22% |
| 2011 | 0.21% | -2.68% |
| 2010 | 15.3% | 27.89% |
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 2013 was the strongest year for VB, returning 37.8% on an annual basis. The poorest year for VB in the last ten years was 2018, with a yield of -9.3%. Most years the Vanguard Small-Cap Index Fund ETF Shares has given investors modest returns, such as in 2017, 2012, and 2016, when gains were 16.24%, 18.22%, and 18.31% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWD | $10,000 | $30,746 | 11.40% |
| VB | $10,000 | $39,734 | 14.25% |
A $10,000 investment in IWD would have resulted in a final balance of $30,746. This is a profit of $20,746 over 11 years and amounts to a compound annual growth rate (CAGR) of 11.40%.
With a $10,000 investment in VB, the end total would have been $39,734. This equates to a $29,734 profit over 11 years and a compound annual growth rate (CAGR) of 14.25%.
IWD’s CAGR is 2.85 percentage points lower than that of VB and as a result, would have yielded $8,988 less on a $10,000 investment. Thus, IWD performed worse than VB by 2.85% annually.
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