IWD vs. VBK: What’s The Difference?

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

The expense ratio of IWD is 0.12 percentage points higher than VBK’s (0.19% vs. 0.07%). IWD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, IWD has provided lower returns than VBK over the past ten years.

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

Summary

IWD VBK
Name iShares Russell 1000 Value ETF Vanguard Small-Cap Growth Index Fund ETF Shares
Category Large Value Small Growth
Issuer iShares Vanguard
AUM 54.1B 37.89B
Avg. Return 11.40% 16.53%
Div. Yield 1.57% 0.45%
Expense Ratio 0.19% 0.07%

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 Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.

IWD’s dividend yield is 1.12% higher than that of VBK (1.57% vs. 0.45%). Also, IWD yielded on average 5.13% less per year over the past decade (11.40% vs. 16.53%). The expense ratio of IWD is 0.12 percentage points higher than VBK’s (0.19% vs. 0.07%).

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Fund Composition

Industry Exposure

IWD vs. VBK - Industry Exposure

IWD VBK
Technology 10.28% 27.87%
Industrials 11.77% 13.19%
Energy 4.76% 1.77%
Communication Services 8.67% 3.24%
Utilities 4.88% 0.32%
Healthcare 17.78% 23.24%
Consumer Defensive 7.76% 3.83%
Real Estate 4.94% 7.87%
Financial Services 20.43% 4.05%
Consumer Cyclical 5.62% 12.13%
Basic Materials 3.1% 2.49%

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 Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.

VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.

IWD is 16.38% more exposed to the Financial Services sector than VBK (20.43% vs 4.05%). IWD’s exposure to Healthcare and Industrials stocks is 5.46% lower and 1.42% lower respectively (17.78% vs. 23.24% and 11.77% vs. 13.19%). In total, Energy, Utilities, and Real Estate also make up 4.62% more of the fund’s holdings compared to VBK (14.58% vs. 9.96%).

Holdings

IWD - 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%.

VBK - Holdings

VBK Holdings Weight
Charles River Laboratories International Inc 0.78%
Pool Corp 0.73%
Bio-Techne Corp 0.73%
Avantor Inc 0.73%
PerkinElmer Inc 0.72%
Entegris Inc 0.7%
PTC Inc 0.62%
Fair Isaac Corp 0.57%
Bill.com Holdings Inc Ordinary Shares 0.56%
Avalara Inc 0.55%

VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.

Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.

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Risk Analysis

IWD VBK
Mean Return 1.03 1.22
R-squared 92.38 80.56
Std. Deviation 14.35 17.95
Alpha -3.23 -2.81
Beta 1.02 1.18
Sharpe Ratio 0.81 0.78
Treynor Ratio 11.06 11.18

The iShares Russell 1000 Value ETF (IWD) has a Treynor Ratio of 11.06 with a Mean Return of 1.03 and a Alpha of -3.23. Its Beta is 1.02 while IWD’s R-squared is 92.38. Furthermore, the fund has a Sharpe Ratio of 0.81 and a Standard Deviation of 14.35.

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Sharpe Ratio of 0.78 with a Treynor Ratio of 11.18 and a Standard Deviation of 17.95. Its R-squared is 80.56 while VBK’s Alpha is -2.81. Furthermore, the fund has a Mean Return of 1.22 and a Beta of 1.18.

IWD’s Mean Return is 0.19 points lower than that of VBK and its R-squared is 11.82 points higher. With a Standard Deviation of 14.35, IWD is slightly less volatile than VBK. The Alpha and Beta of IWD are 0.42 points lower and 0.16 points lower than VBK’s Alpha and Beta.

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Performance

Annual Returns

IWD vs. VBK - Annual Returns

Year IWD VBK
2020 2.67% 35.29%
2019 26.34% 32.75%
2018 -8.4% -5.68%
2017 13.47% 21.9%
2016 17.09% 10.74%
2015 -3.95% -2.51%
2014 13.21% 4.02%
2013 32.18% 38.18%
2012 17.28% 17.67%
2011 0.21% -1.43%
2010 15.3% 30.87%

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 VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.

Portfolio Growth

IWD vs. VBK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWD $10,000 $30,746 11.40%
VBK $10,000 $48,639 16.53%

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 VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.

IWD’s CAGR is 5.13 percentage points lower than that of VBK and as a result, would have yielded $17,893 less on a $10,000 investment. Thus, IWD performed worse than VBK by 5.13% annually.


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