IWD vs. VLUE: What’s The Difference?

The iShares Russell 1000 Value ETF (IWD) and the iShares MSCI USA Value Factor ETF (VLUE) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and VLUE is a iShares Large Value fund. So, what’s the difference between IWD and VLUE? And which fund is better?

The expense ratio of IWD is 0.04 percentage points higher than VLUE’s (0.19% vs. 0.15%). IWD also has a higher exposure to the financial services sector and a higher standard deviation. Overall, IWD has provided higher returns than VLUE over the past ten years.

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

Summary

IWD VLUE
Name iShares Russell 1000 Value ETF iShares MSCI USA Value Factor ETF
Category Large Value Large Value
Issuer iShares iShares
AUM 54.1B 15.95B
Avg. Return 11.40% 8.91%
Div. Yield 1.57% 1.89%
Expense Ratio 0.19% 0.15%

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 iShares MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.

IWD’s dividend yield is 0.32% lower than that of VLUE (1.57% vs. 1.89%). Also, IWD yielded on average 2.49% more per year over the past decade (11.40% vs. 8.91%). The expense ratio of IWD is 0.04 percentage points higher than VLUE’s (0.19% vs. 0.15%).

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Fund Composition

Industry Exposure

IWD vs. VLUE - Industry Exposure

IWD VLUE
Technology 10.28% 26.89%
Industrials 11.77% 9.14%
Energy 4.76% 2.42%
Communication Services 8.67% 10.39%
Utilities 4.88% 2.68%
Healthcare 17.78% 14.31%
Consumer Defensive 7.76% 7.22%
Real Estate 4.94% 3.19%
Financial Services 20.43% 10.96%
Consumer Cyclical 5.62% 10.66%
Basic Materials 3.1% 2.14%

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 iShares MSCI USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.

VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.

IWD is 9.47% more exposed to the Financial Services sector than VLUE (20.43% vs 10.96%). IWD’s exposure to Healthcare and Industrials stocks is 3.47% higher and 2.63% higher respectively (17.78% vs. 14.31% and 11.77% vs. 9.14%). In total, Energy, Utilities, and Real Estate also make up 6.29% more of the fund’s holdings compared to VLUE (14.58% vs. 8.29%).

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%.

VLUE - Holdings

VLUE Holdings Weight
AT&T Inc 7.13%
Intel Corp 6.14%
General Motors Co 3.19%
Micron Technology Inc 3.14%
Cisco Systems Inc 3.05%
International Business Machines Corp 2.76%
Target Corp 2.38%
Citigroup Inc 2.32%
Ford Motor Co 2.23%
Pfizer Inc 2.17%

VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.

International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.

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Risk Analysis

IWD VLUE
Mean Return 1.03 0
R-squared 92.38 0
Std. Deviation 14.35 0
Alpha -3.23 0
Beta 1.02 0
Sharpe Ratio 0.81 0
Treynor Ratio 11.06 0

The iShares Russell 1000 Value ETF (IWD) has a Sharpe Ratio of 0.81 with a R-squared of 92.38 and a Mean Return of 1.03. Its Treynor Ratio is 11.06 while IWD’s Standard Deviation is 14.35. Furthermore, the fund has a Alpha of -3.23 and a Beta of 1.02.

The iShares MSCI USA Value Factor ETF (VLUE) has a Treynor Ratio of 0 with a R-squared of 0 and a Mean Return of 0. Its Sharpe Ratio is 0 while VLUE’s Standard Deviation is 0. Furthermore, the fund has a Alpha of 0 and a Beta of 0.

IWD’s Mean Return is 1.03 points higher than that of VLUE and its R-squared is 92.38 points higher. With a Standard Deviation of 14.35, IWD is slightly more volatile than VLUE. The Alpha and Beta of IWD are 3.23 points lower and 1.02 points higher than VLUE’s Alpha and Beta.

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Performance

Annual Returns

IWD vs. VLUE - Annual Returns

Year IWD VLUE
2020 2.67% -0.32%
2019 26.34% 27.47%
2018 -8.4% -11.18%
2017 13.47% 21.97%
2016 17.09% 15.68%
2015 -3.95% -3.54%
2014 13.21% 12.29%
2013 32.18% 0.0%
2012 17.28% 0.0%
2011 0.21% 0.0%
2010 15.3% 0.0%

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 VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

IWD vs. VLUE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWD $10,000 $17,165 11.40%
VLUE $10,000 $17,247 8.91%

A $10,000 investment in IWD would have resulted in a final balance of $17,165. This is a profit of $7,165 over 7 years and amounts to a compound annual growth rate (CAGR) of 11.40%.

With a $10,000 investment in VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.

IWD’s CAGR is 2.49 percentage points higher than that of VLUE and as a result, would have yielded $82 less on a $10,000 investment. Thus, IWD outperformed VLUE by 2.49% annually.


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