The iShares Russell 1000 Value ETF (IWD) and the Vanguard Small-Cap Value Index Fund ETF Shares (VBR) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and VBR is a Vanguard Small Value fund. So, what’s the difference between IWD and VBR? And which fund is better?
The expense ratio of IWD is 0.12 percentage points higher than VBR’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 VBR over the past ten years.
In this article, we’ll compare IWD vs. VBR. We’ll look at annual returns and fund composition, as well as at their holdings and risk metrics. Moreover, I’ll also discuss IWD’s and VBR’s performance, portfolio growth, and industry exposure and examine how these affect their overall returns.
|Name||iShares Russell 1000 Value ETF||Vanguard Small-Cap Value Index Fund ETF Shares|
|Category||Large Value||Small Value|
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 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%.
IWD’s dividend yield is 0.03% lower than that of VBR (1.57% vs. 1.6%). Also, IWD yielded on average 0.88% less per year over the past decade (11.40% vs. 12.28%). The expense ratio of IWD is 0.12 percentage points higher than VBR’s (0.19% vs. 0.07%).
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 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%.
IWD is 0.39% more exposed to the Financial Services sector than VBR (20.43% vs 20.04%). IWD’s exposure to Healthcare and Industrials stocks is 10.62% higher and 6.67% lower respectively (17.78% vs. 7.16% and 11.77% vs. 18.44%). In total, Energy, Utilities, and Real Estate also make up 5.14% less of the fund’s holdings compared to VBR (14.58% vs. 19.72%).
|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%|
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%.
|Diamondback Energy Inc||0.55%|
|VICI Properties Inc Ordinary Shares||0.54%|
|Nuance Communications Inc||0.5%|
|Molina Healthcare Inc||0.48%|
|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%.
The iShares Russell 1000 Value ETF (IWD) has a Treynor Ratio of 11.06 with a Standard Deviation of 14.35 and a R-squared of 92.38. Its Sharpe Ratio is 0.81 while IWD’s Beta is 1.02. Furthermore, the fund has a Mean Return of 1.03 and a Alpha of -3.23.
The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Sharpe Ratio of 0.67 with a Beta of 1.23 and a Alpha of -5.09. Its Treynor Ratio is 9.15 while VBR’s Mean Return is 1.08. Furthermore, the fund has a R-squared of 82.2 and a Standard Deviation of 18.37.
IWD’s Mean Return is 0.05 points lower than that of VBR and its R-squared is 10.18 points higher. With a Standard Deviation of 14.35, IWD is slightly less volatile than VBR. The Alpha and Beta of IWD are 1.86 points higher and 0.21 points lower than VBR’s Alpha and Beta.
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 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.
|Fund||Initial Balance||Final Balance||CAGR|
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 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%.
IWD’s CAGR is 0.88 percentage points lower than that of VBR and as a result, would have yielded $1,865 less on a $10,000 investment. Thus, IWD performed worse than VBR by 0.88% annually.
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