The iShares Russell 1000 Value ETF (IWD) and the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and VCIT is a Vanguard Corporate Bond fund. So, what’s the difference between IWD and VCIT? And which fund is better?
The expense ratio of IWD is 0.14 percentage points higher than VCIT’s (0.19% vs. 0.05%). IWD also has a high exposure to the financial services sector while VCIT is mostly comprised of BBB bonds. Overall, IWD has provided higher returns than VCIT over the past ten years.
In this article, we’ll compare IWD vs. VCIT. We’ll look at fund composition and industry exposure, as well as at their portfolio growth and risk metrics. Moreover, I’ll also discuss IWD’s and VCIT’s performance, holdings, and annual returns and examine how these affect their overall returns.
|Name||iShares Russell 1000 Value ETF||Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares|
|Category||Large Value||Corporate Bond|
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 Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) is a Corporate Bond fund that is issued by Vanguard. It currently has 48.39B total assets under management and has yielded an average annual return of 5.84% over the past 10 years. The fund has a dividend yield of 2.33% with an expense ratio of 0.05%.
IWD’s dividend yield is 0.76% lower than that of VCIT (1.57% vs. 2.33%). Also, IWD yielded on average 5.56% more per year over the past decade (11.40% vs. 5.84%). The expense ratio of IWD is 0.14 percentage points higher than VCIT’s (0.19% vs. 0.05%).
|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%.
|VCIT Bond Sectors||Weight|
VCIT’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and Below B at 55.28%, 37.85%, 5.22%, 1.57%, and 0.08%. The fund is less weighted towards Others (0.0%), B (0.0%), and BB (0.0%) rated bonds.
The iShares Russell 1000 Value ETF (IWD) has a Standard Deviation of 14.35 with a Sharpe Ratio of 0.81 and a Mean Return of 1.03. Its Alpha is -3.23 while IWD’s R-squared is 92.38. Furthermore, the fund has a Beta of 1.02 and a Treynor Ratio of 11.06.
The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a Standard Deviation of 5.08 with a R-squared of 63.18 and a Sharpe Ratio of 0.91. Its Treynor Ratio is 3.43 while VCIT’s Mean Return is 0.44. Furthermore, the fund has a Beta of 1.35 and a Alpha of 0.89.
IWD’s Mean Return is 0.59 points higher than that of VCIT and its R-squared is 29.20 points higher. With a Standard Deviation of 14.35, IWD is slightly more volatile than VCIT. The Alpha and Beta of IWD are 4.12 points lower and 0.33 points lower than VCIT’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 2019 was the strongest year for VCIT, returning 13.97% on an annual basis. The poorest year for VCIT in the last ten years was 2013, with a yield of -1.8%. Most years the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2011, when gains were 5.5%, 7.47%, and 7.94% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IWD would have resulted in a final balance of $26,666. This is a profit of $16,666 over 10 years and amounts to a compound annual growth rate (CAGR) of 11.40%.
With a $10,000 investment in VCIT, the end total would have been $17,439. This equates to a $7,439 profit over 10 years and a compound annual growth rate (CAGR) of 5.84%.
IWD’s CAGR is 5.56 percentage points higher than that of VCIT and as a result, would have yielded $9,227 more on a $10,000 investment. Thus, IWD outperformed VCIT by 5.56% annually.
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