The iShares Russell 1000 Value ETF (IWD) and the Vanguard FTSE Europe Index Fund ETF Shares (VGK) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and VGK is a Vanguard Europe Stock fund. So, what’s the difference between IWD and VGK? And which fund is better?
The expense ratio of IWD is 0.11 percentage points higher than VGK’s (0.19% vs. 0.08%). IWD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, IWD has provided higher returns than VGK over the past ten years.
In this article, we’ll compare IWD vs. VGK. We’ll look at holdings and industry exposure, as well as at their risk metrics and performance. Moreover, I’ll also discuss IWD’s and VGK’s portfolio growth, annual returns, and fund composition and examine how these affect their overall returns.
Summary
| IWD | VGK | |
| Name | iShares Russell 1000 Value ETF | Vanguard FTSE Europe Index Fund ETF Shares |
| Category | Large Value | Europe Stock |
| Issuer | iShares | Vanguard |
| AUM | 54.1B | 25.7B |
| Avg. Return | 11.40% | 6.68% |
| Div. Yield | 1.57% | 2.52% |
| Expense Ratio | 0.19% | 0.08% |
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 FTSE Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% with an expense ratio of 0.08%.
IWD’s dividend yield is 0.95% lower than that of VGK (1.57% vs. 2.52%). Also, IWD yielded on average 4.72% more per year over the past decade (11.40% vs. 6.68%). The expense ratio of IWD is 0.11 percentage points higher than VGK’s (0.19% vs. 0.08%).
Fund Composition
Industry Exposure
| IWD | VGK | |
| Technology | 10.28% | 8.3% |
| Industrials | 11.77% | 15.58% |
| Energy | 4.76% | 4.3% |
| Communication Services | 8.67% | 5.09% |
| Utilities | 4.88% | 3.89% |
| Healthcare | 17.78% | 13.76% |
| Consumer Defensive | 7.76% | 11.39% |
| Real Estate | 4.94% | 2.57% |
| Financial Services | 20.43% | 15.85% |
| Consumer Cyclical | 5.62% | 11.6% |
| Basic Materials | 3.1% | 7.67% |
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 FTSE Europe Index Fund ETF Shares (VGK) has the most exposure to the Financial Services sector at 15.85%. This is followed by Industrials and Healthcare at 15.58% and 13.76% respectively. Utilities (3.89%), Energy (4.3%), and Communication Services (5.09%) only make up 13.28% of the fund’s total assets.
VGK’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.67%, 8.3%, 11.39%, 11.6%, and 13.76%.
IWD is 4.58% more exposed to the Financial Services sector than VGK (20.43% vs 15.85%). IWD’s exposure to Healthcare and Industrials stocks is 4.02% higher and 3.81% lower respectively (17.78% vs. 13.76% and 11.77% vs. 15.58%). In total, Energy, Utilities, and Real Estate also make up 3.82% more of the fund’s holdings compared to VGK (14.58% vs. 10.76%).
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%.
| VGK Holdings | Weight |
| Nestle SA | 2.82% |
| ASML Holding NV | 2.2% |
| Roche Holding AG | 2.13% |
| LVMH Moet Hennessy Louis Vuitton SE | 1.58% |
| Novartis AG | 1.55% |
| AstraZeneca PLC | 1.27% |
| SAP SE | 1.25% |
| Unilever PLC | 1.23% |
| Novo Nordisk A/S B | 1.09% |
| Siemens AG | 0.96% |
VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.
AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.
Risk Analysis
| IWD | VGK | |
| Mean Return | 1.03 | 0.61 |
| R-squared | 92.38 | 92.76 |
| Std. Deviation | 14.35 | 16.65 |
| Alpha | -3.23 | 0.45 |
| Beta | 1.02 | 1.06 |
| Sharpe Ratio | 0.81 | 0.4 |
| Treynor Ratio | 11.06 | 5.12 |
The iShares Russell 1000 Value ETF (IWD) has a Mean Return of 1.03 with a Alpha of -3.23 and a Sharpe Ratio of 0.81. Its Beta is 1.02 while IWD’s Treynor Ratio is 11.06. Furthermore, the fund has a R-squared of 92.38 and a Standard Deviation of 14.35.
The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Treynor Ratio of 5.12 with a Mean Return of 0.61 and a Alpha of 0.45. Its Standard Deviation is 16.65 while VGK’s Beta is 1.06. Furthermore, the fund has a R-squared of 92.76 and a Sharpe Ratio of 0.4.
IWD’s Mean Return is 0.42 points higher than that of VGK and its R-squared is 0.38 points lower. With a Standard Deviation of 14.35, IWD is slightly less volatile than VGK. The Alpha and Beta of IWD are 3.68 points lower and 0.04 points lower than VGK’s Alpha and Beta.
Performance
Annual Returns
| Year | IWD | VGK |
| 2020 | 2.67% | 6.5% |
| 2019 | 26.34% | 24.26% |
| 2018 | -8.4% | -14.79% |
| 2017 | 13.47% | 27.06% |
| 2016 | 17.09% | -0.59% |
| 2015 | -3.95% | -1.87% |
| 2014 | 13.21% | -6.56% |
| 2013 | 32.18% | 24.93% |
| 2012 | 17.28% | 21.01% |
| 2011 | 0.21% | -11.49% |
| 2010 | 15.3% | 5.01% |
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 2017 was the strongest year for VGK, returning 27.06% on an annual basis. The poorest year for VGK in the last ten years was 2018, with a yield of -14.79%. Most years the Vanguard FTSE Europe Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were -0.59%, 5.01%, and 6.5% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWD | $10,000 | $30,746 | 11.40% |
| VGK | $10,000 | $18,350 | 6.68% |
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 VGK, the end total would have been $18,350. This equates to a $8,350 profit over 11 years and a compound annual growth rate (CAGR) of 6.68%.
IWD’s CAGR is 4.72 percentage points higher than that of VGK and as a result, would have yielded $12,396 more on a $10,000 investment. Thus, IWD outperformed VGK by 4.72% annually.
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