IWD vs. VHT: What’s The Difference?

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

The expense ratio of IWD is 0.09 percentage points higher than VHT’s (0.19% vs. 0.1%). IWD also has a higher exposure to the financial services sector and a higher standard deviation. Overall, IWD has provided lower returns than VHT over the past ten years.

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

Summary

IWD VHT
Name iShares Russell 1000 Value ETF Vanguard Health Care Index Fund ETF Shares
Category Large Value Health
Issuer iShares Vanguard
AUM 54.1B 17.94B
Avg. Return 11.40% 16.04%
Div. Yield 1.57% 1.15%
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 Health Care Index Fund ETF Shares (VHT) is a Health fund that is issued by Vanguard. It currently has 17.94B total assets under management and has yielded an average annual return of 16.04% over the past 10 years. The fund has a dividend yield of 1.15% with an expense ratio of 0.1%.

IWD’s dividend yield is 0.42% higher than that of VHT (1.57% vs. 1.15%). Also, IWD yielded on average 4.64% less per year over the past decade (11.40% vs. 16.04%). The expense ratio of IWD is 0.09 percentage points higher than VHT’s (0.19% vs. 0.1%).

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Fund Composition

Industry Exposure

IWD vs. VHT - Industry Exposure

IWD VHT
Technology 10.28% 0.05%
Industrials 11.77% 0.05%
Energy 4.76% 0.0%
Communication Services 8.67% 0.0%
Utilities 4.88% 0.0%
Healthcare 17.78% 99.57%
Consumer Defensive 7.76% 0.0%
Real Estate 4.94% 0.0%
Financial Services 20.43% 0.02%
Consumer Cyclical 5.62% 0.0%
Basic Materials 3.1% 0.31%

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 Health Care Index Fund ETF Shares (VHT) has the most exposure to the Healthcare sector at 99.57%. This is followed by Basic Materials and Technology at 0.31% and 0.05% respectively. Real Estate (0.0%), Consumer Defensive (0.0%), and Utilities (0.0%) only make up 0.00% of the fund’s total assets.

VHT’s mid-section with moderate exposure is comprised of Communication Services, Energy, Financial Services, Industrials, and Technology stocks at 0.0%, 0.0%, 0.02%, 0.05%, and 0.05%.

IWD is 20.41% more exposed to the Financial Services sector than VHT (20.43% vs 0.02%). IWD’s exposure to Healthcare and Industrials stocks is 81.79% lower and 11.72% higher respectively (17.78% vs. 99.57% and 11.77% vs. 0.05%). In total, Energy, Utilities, and Real Estate also make up 14.58% more of the fund’s holdings compared to VHT (14.58% vs. 0.00%).

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%.

VHT - Holdings

VHT Holdings Weight
Johnson & Johnson 7.34%
UnitedHealth Group Inc 6.44%
Pfizer Inc 3.7%
Abbott Laboratories 3.48%
Thermo Fisher Scientific Inc 3.37%
AbbVie Inc 3.37%
Merck & Co Inc 3.33%
Eli Lilly and Co 3.17%
Danaher Corp 2.91%
Medtronic PLC 2.83%

VHT’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and Thermo Fisher Scientific Inc at 7.34%, 6.44%, 3.7%, 3.48%, and 3.37%.

AbbVie Inc (3.37%), Merck & Co Inc (3.33%), and Eli Lilly and Co (3.17%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the VHT’s holdings at 2.91% and 2.83%.

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Risk Analysis

IWD VHT
Mean Return 1.03 1.33
R-squared 92.38 59.86
Std. Deviation 14.35 13.58
Alpha -3.23 7.99
Beta 1.02 0.75
Sharpe Ratio 0.81 1.13
Treynor Ratio 11.06 20.74

The iShares Russell 1000 Value ETF (IWD) has a Standard Deviation of 14.35 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 Treynor Ratio of 11.06.

The Vanguard Health Care Index Fund ETF Shares (VHT) has a Standard Deviation of 13.58 with a Mean Return of 1.33 and a Beta of 0.75. Its Alpha is 7.99 while VHT’s Treynor Ratio is 20.74. Furthermore, the fund has a Sharpe Ratio of 1.13 and a R-squared of 59.86.

IWD’s Mean Return is 0.30 points lower than that of VHT and its R-squared is 32.52 points higher. With a Standard Deviation of 14.35, IWD is slightly more volatile than VHT. The Alpha and Beta of IWD are 11.22 points lower and 0.27 points higher than VHT’s Alpha and Beta.

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Performance

Annual Returns

IWD vs. VHT - Annual Returns

Year IWD VHT
2020 2.67% 18.21%
2019 26.34% 21.97%
2018 -8.4% 5.55%
2017 13.47% 23.34%
2016 17.09% -3.33%
2015 -3.95% 7.22%
2014 13.21% 25.38%
2013 32.18% 42.67%
2012 17.28% 19.1%
2011 0.21% 10.57%
2010 15.3% 5.75%

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 VHT, returning 42.67% on an annual basis. The poorest year for VHT in the last ten years was 2016, with a yield of -3.33%. Most years the Vanguard Health Care Index Fund ETF Shares has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 10.57%, 18.21%, and 19.1% respectively.

Portfolio Growth

IWD vs. VHT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWD $10,000 $30,746 11.40%
VHT $10,000 $48,464 16.04%

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 VHT, the end total would have been $48,464. This equates to a $38,464 profit over 11 years and a compound annual growth rate (CAGR) of 16.04%.

IWD’s CAGR is 4.64 percentage points lower than that of VHT and as a result, would have yielded $17,718 less on a $10,000 investment. Thus, IWD performed worse than VHT by 4.64% annually.


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