The iShares Russell 1000 Value ETF (IWD) and the Vanguard Information Technology Index Fund ETF Shares (VGT) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and VGT is a Vanguard Technology fund. So, what’s the difference between IWD and VGT? And which fund is better?
The expense ratio of IWD is 0.09 percentage points higher than VGT’s (0.19% vs. 0.1%). IWD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, IWD has provided lower returns than VGT over the past ten years.
In this article, we’ll compare IWD vs. VGT. We’ll look at industry exposure and holdings, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss IWD’s and VGT’s fund composition, risk metrics, and performance and examine how these affect their overall returns.
Summary
| IWD | VGT | |
| Name | iShares Russell 1000 Value ETF | Vanguard Information Technology Index Fund ETF Shares |
| Category | Large Value | Technology |
| Issuer | iShares | Vanguard |
| AUM | 54.1B | 54.13B |
| Avg. Return | 11.40% | 20.84% |
| Div. Yield | 1.57% | 0.66% |
| Expense Ratio | 0.19% | 0.1% |
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 Information Technology Index Fund ETF Shares (VGT) is a Technology fund that is issued by Vanguard. It currently has 54.13B total assets under management and has yielded an average annual return of 20.84% over the past 10 years. The fund has a dividend yield of 0.66% with an expense ratio of 0.1%.
IWD’s dividend yield is 0.91% higher than that of VGT (1.57% vs. 0.66%). Also, IWD yielded on average 9.44% less per year over the past decade (11.40% vs. 20.84%). The expense ratio of IWD is 0.09 percentage points higher than VGT’s (0.19% vs. 0.1%).
Fund Composition
Industry Exposure
| IWD | VGT | |
| Technology | 10.28% | 88.89% |
| Industrials | 11.77% | 1.67% |
| Energy | 4.76% | 0.0% |
| Communication Services | 8.67% | 0.61% |
| Utilities | 4.88% | 0.0% |
| Healthcare | 17.78% | 0.0% |
| Consumer Defensive | 7.76% | 0.0% |
| Real Estate | 4.94% | 0.0% |
| Financial Services | 20.43% | 8.83% |
| Consumer Cyclical | 5.62% | 0.0% |
| Basic Materials | 3.1% | 0.0% |
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 Information Technology Index Fund ETF Shares (VGT) has the most exposure to the Technology sector at 88.89%. This is followed by Financial Services and Industrials at 8.83% and 1.67% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
VGT’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Energy, Communication Services, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.61%, and 1.67%.
IWD is 11.60% more exposed to the Financial Services sector than VGT (20.43% vs 8.83%). IWD’s exposure to Healthcare and Industrials stocks is 17.78% higher and 10.10% higher respectively (17.78% vs. 0.0% and 11.77% vs. 1.67%). In total, Energy, Utilities, and Real Estate also make up 14.58% more of the fund’s holdings compared to VGT (14.58% vs. 0.00%).
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%.
| VGT Holdings | Weight |
| Apple Inc | 19.58% |
| Microsoft Corp | 16.53% |
| NVIDIA Corp | 4.22% |
| Visa Inc Class A | 3.16% |
| PayPal Holdings Inc | 2.76% |
| Mastercard Inc Class A | 2.76% |
| Adobe Inc | 2.39% |
| Intel Corp | 1.94% |
| Salesforce.com Inc | 1.91% |
| Cisco Systems Inc | 1.9% |
VGT’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 19.58%, 16.53%, 4.22%, 3.16%, and 2.76%.
Mastercard Inc Class A (2.76%), Adobe Inc (2.39%), and Intel Corp (1.94%) have a slightly smaller but still significant weight. Salesforce.com Inc and Cisco Systems Inc are also represented in the VGT’s holdings at 1.91% and 1.9%.
Risk Analysis
| IWD | VGT | |
| Mean Return | 1.03 | 1.76 |
| R-squared | 92.38 | 74.84 |
| Std. Deviation | 14.35 | 16.61 |
| Alpha | -3.23 | 10.41 |
| Beta | 1.02 | 1.02 |
| Sharpe Ratio | 0.81 | 1.23 |
| Treynor Ratio | 11.06 | 20.55 |
The iShares Russell 1000 Value ETF (IWD) has a Standard Deviation of 14.35 with a R-squared of 92.38 and a Alpha of -3.23. Its Mean Return is 1.03 while IWD’s Beta is 1.02. Furthermore, the fund has a Treynor Ratio of 11.06 and a Sharpe Ratio of 0.81.
The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Alpha of 10.41 with a Treynor Ratio of 20.55 and a Beta of 1.02. Its Standard Deviation is 16.61 while VGT’s Mean Return is 1.76. Furthermore, the fund has a R-squared of 74.84 and a Sharpe Ratio of 1.23.
IWD’s Mean Return is 0.73 points lower than that of VGT and its R-squared is 17.54 points higher. With a Standard Deviation of 14.35, IWD is slightly less volatile than VGT. The Alpha and Beta of IWD are 13.64 points lower and 0.00 points lower than VGT’s Alpha and Beta.
Performance
Annual Returns
| Year | IWD | VGT |
| 2020 | 2.67% | 45.94% |
| 2019 | 26.34% | 48.68% |
| 2018 | -8.4% | 2.52% |
| 2017 | 13.47% | 37.07% |
| 2016 | 17.09% | 13.73% |
| 2015 | -3.95% | 5.02% |
| 2014 | 13.21% | 18.01% |
| 2013 | 32.18% | 30.91% |
| 2012 | 17.28% | 14.05% |
| 2011 | 0.21% | 0.52% |
| 2010 | 15.3% | 12.74% |
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 VGT, returning 48.68% on an annual basis. The poorest year for VGT in the last ten years was 2011, with a yield of 0.52%. Most years the Vanguard Information Technology Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2014, when gains were 13.73%, 14.05%, and 18.01% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWD | $10,000 | $30,746 | 11.40% |
| VGT | $10,000 | $72,718 | 20.84% |
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 VGT, the end total would have been $72,718. This equates to a $62,718 profit over 11 years and a compound annual growth rate (CAGR) of 20.84%.
IWD’s CAGR is 9.44 percentage points lower than that of VGT and as a result, would have yielded $41,972 less on a $10,000 investment. Thus, IWD performed worse than VGT by 9.44% annually.
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