The iShares Russell 1000 Value ETF (IWD) and the Vanguard Mid-Cap Index Fund ETF Shares (VO) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and VO is a Vanguard Mid-Cap Blend fund. So, what’s the difference between IWD and VO? And which fund is better?
The expense ratio of IWD is 0.15 percentage points higher than VO’s (0.19% vs. 0.04%). IWD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, IWD has provided lower returns than VO over the past ten years.
In this article, we’ll compare IWD vs. VO. We’ll look at portfolio growth and annual returns, as well as at their fund composition and industry exposure. Moreover, I’ll also discuss IWD’s and VO’s risk metrics, holdings, and performance and examine how these affect their overall returns.
Summary
| IWD | VO | |
| Name | iShares Russell 1000 Value ETF | Vanguard Mid-Cap Index Fund ETF Shares |
| Category | Large Value | Mid-Cap Blend |
| Issuer | iShares | Vanguard |
| AUM | 54.1B | 154.08B |
| Avg. Return | 11.40% | 14.34% |
| Div. Yield | 1.57% | 1.23% |
| Expense Ratio | 0.19% | 0.04% |
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 Mid-Cap Index Fund ETF Shares (VO) is a Mid-Cap Blend fund that is issued by Vanguard. It currently has 154.08B total assets under management and has yielded an average annual return of 14.34% over the past 10 years. The fund has a dividend yield of 1.23% with an expense ratio of 0.04%.
IWD’s dividend yield is 0.34% higher than that of VO (1.57% vs. 1.23%). Also, IWD yielded on average 2.94% less per year over the past decade (11.40% vs. 14.34%). The expense ratio of IWD is 0.15 percentage points higher than VO’s (0.19% vs. 0.04%).
Fund Composition
Industry Exposure
| IWD | VO | |
| Technology | 10.28% | 22.01% |
| Industrials | 11.77% | 11.92% |
| Energy | 4.76% | 3.82% |
| Communication Services | 8.67% | 5.61% |
| Utilities | 4.88% | 5.12% |
| Healthcare | 17.78% | 13.03% |
| Consumer Defensive | 7.76% | 3.25% |
| Real Estate | 4.94% | 8.67% |
| Financial Services | 20.43% | 11.08% |
| Consumer Cyclical | 5.62% | 12.12% |
| Basic Materials | 3.1% | 3.36% |
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 Mid-Cap Index Fund ETF Shares (VO) has the most exposure to the Technology sector at 22.01%. This is followed by Healthcare and Consumer Cyclical at 13.03% and 12.12% respectively. Basic Materials (3.36%), Energy (3.82%), and Utilities (5.12%) only make up 12.30% of the fund’s total assets.
VO’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Industrials, and Consumer Cyclical stocks at 5.61%, 8.67%, 11.08%, 11.92%, and 12.12%.
IWD is 9.35% more exposed to the Financial Services sector than VO (20.43% vs 11.08%). IWD’s exposure to Healthcare and Industrials stocks is 4.75% higher and 0.15% lower respectively (17.78% vs. 13.03% and 11.77% vs. 11.92%). In total, Energy, Utilities, and Real Estate also make up 3.03% less of the fund’s holdings compared to VO (14.58% vs. 17.61%).
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%.
| VO Holdings | Weight |
| IDEXX Laboratories Inc | 0.78% |
| DocuSign Inc | 0.75% |
| Marvell Technology Inc | 0.68% |
| IQVIA Holdings Inc | 0.68% |
| Chipotle Mexican Grill Inc | 0.63% |
| Veeva Systems Inc Class A | 0.62% |
| Digital Realty Trust Inc | 0.62% |
| Centene Corp | 0.62% |
| Aptiv PLC | 0.62% |
| Carrier Global Corp Ordinary Shares | 0.61% |
VO’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Marvell Technology Inc, IQVIA Holdings Inc, and Chipotle Mexican Grill Inc at 0.78%, 0.75%, 0.68%, 0.68%, and 0.63%.
Veeva Systems Inc Class A (0.62%), Digital Realty Trust Inc (0.62%), and Centene Corp (0.62%) have a slightly smaller but still significant weight. Aptiv PLC and Carrier Global Corp Ordinary Shares are also represented in the VO’s holdings at 0.62% and 0.61%.
Risk Analysis
| IWD | VO | |
| Mean Return | 1.03 | 1.14 |
| R-squared | 92.38 | 92.22 |
| Std. Deviation | 14.35 | 15.65 |
| Alpha | -3.23 | -2.71 |
| Beta | 1.02 | 1.11 |
| Sharpe Ratio | 0.81 | 0.83 |
| Treynor Ratio | 11.06 | 11.32 |
The iShares Russell 1000 Value ETF (IWD) has a Beta of 1.02 with a R-squared of 92.38 and a Standard Deviation of 14.35. Its Mean Return is 1.03 while IWD’s Treynor Ratio is 11.06. Furthermore, the fund has a Alpha of -3.23 and a Sharpe Ratio of 0.81.
The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a R-squared of 92.22 with a Standard Deviation of 15.65 and a Sharpe Ratio of 0.83. Its Beta is 1.11 while VO’s Mean Return is 1.14. Furthermore, the fund has a Treynor Ratio of 11.32 and a Alpha of -2.71.
IWD’s Mean Return is 0.11 points lower than that of VO and its R-squared is 0.16 points higher. With a Standard Deviation of 14.35, IWD is slightly less volatile than VO. The Alpha and Beta of IWD are 0.52 points lower and 0.09 points lower than VO’s Alpha and Beta.
Performance
Annual Returns
| Year | IWD | VO |
| 2020 | 2.67% | 18.22% |
| 2019 | 26.34% | 31.04% |
| 2018 | -8.4% | -9.21% |
| 2017 | 13.47% | 19.25% |
| 2016 | 17.09% | 11.23% |
| 2015 | -3.95% | -1.34% |
| 2014 | 13.21% | 13.76% |
| 2013 | 32.18% | 35.15% |
| 2012 | 17.28% | 15.98% |
| 2011 | 0.21% | -1.96% |
| 2010 | 15.3% | 25.57% |
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 VO, returning 35.15% on an annual basis. The poorest year for VO in the last ten years was 2018, with a yield of -9.21%. Most years the Vanguard Mid-Cap Index Fund ETF Shares has given investors modest returns, such as in 2014, 2012, and 2020, when gains were 13.76%, 15.98%, and 18.22% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWD | $10,000 | $30,746 | 11.40% |
| VO | $10,000 | $40,404 | 14.34% |
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 VO, the end total would have been $40,404. This equates to a $30,404 profit over 11 years and a compound annual growth rate (CAGR) of 14.34%.
IWD’s CAGR is 2.94 percentage points lower than that of VO and as a result, would have yielded $9,658 less on a $10,000 investment. Thus, IWD performed worse than VO by 2.94% annually.
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