IWD vs. VOE: What’s The Difference?

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

The expense ratio of IWD is 0.12 percentage points higher than VOE’s (0.19% vs. 0.07%). IWD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, IWD has provided lower returns than VOE over the past ten years.

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

Summary

IWD VOE
Name iShares Russell 1000 Value ETF Vanguard Mid-Cap Value Index Fund ETF Shares
Category Large Value Mid-Cap Value
Issuer iShares Vanguard
AUM 54.1B 26.78B
Avg. Return 11.40% 12.52%
Div. Yield 1.57% 1.87%
Expense Ratio 0.19% 0.07%

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 Value Index Fund ETF Shares (VOE) is a Mid-Cap Value fund that is issued by Vanguard. It currently has 26.78B total assets under management and has yielded an average annual return of 12.52% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.07%.

IWD’s dividend yield is 0.30% lower than that of VOE (1.57% vs. 1.87%). Also, IWD yielded on average 1.12% less per year over the past decade (11.40% vs. 12.52%). The expense ratio of IWD is 0.12 percentage points higher than VOE’s (0.19% vs. 0.07%).

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Fund Composition

Industry Exposure

IWD vs. VOE - Industry Exposure

IWD VOE
Technology 10.28% 9.85%
Industrials 11.77% 9.4%
Energy 4.76% 5.69%
Communication Services 8.67% 5.27%
Utilities 4.88% 10.93%
Healthcare 17.78% 7.04%
Consumer Defensive 7.76% 4.85%
Real Estate 4.94% 11.48%
Financial Services 20.43% 18.26%
Consumer Cyclical 5.62% 11.8%
Basic Materials 3.1% 5.44%

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 Value Index Fund ETF Shares (VOE) has the most exposure to the Financial Services sector at 18.26%. This is followed by Consumer Cyclical and Real Estate at 11.8% and 11.48% respectively. Communication Services (5.27%), Basic Materials (5.44%), and Energy (5.69%) only make up 16.40% of the fund’s total assets.

VOE’s mid-section with moderate exposure is comprised of Healthcare, Industrials, Technology, Utilities, and Real Estate stocks at 7.04%, 9.4%, 9.85%, 10.93%, and 11.48%.

IWD is 2.17% more exposed to the Financial Services sector than VOE (20.43% vs 18.26%). IWD’s exposure to Healthcare and Industrials stocks is 10.74% higher and 2.37% higher respectively (17.78% vs. 7.04% and 11.77% vs. 9.4%). In total, Energy, Utilities, and Real Estate also make up 13.52% less of the fund’s holdings compared to VOE (14.58% vs. 28.10%).

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%.

VOE - Holdings

VOE Holdings Weight
Carrier Global Corp Ordinary Shares 1.28%
International Flavors & Fragrances Inc 1.13%
Motorola Solutions Inc 1.12%
Discover Financial Services 1.09%
Welltower Inc 1.05%
Corteva Inc 0.99%
Valero Energy Corp 0.97%
Corning Inc 0.95%
Willis Towers Watson PLC 0.9%
D.R. Horton Inc 0.89%

VOE’s Top Holdings are Carrier Global Corp Ordinary Shares, International Flavors & Fragrances Inc, Motorola Solutions Inc, Discover Financial Services, and Welltower Inc at 1.28%, 1.13%, 1.12%, 1.09%, and 1.05%.

Corteva Inc (0.99%), Valero Energy Corp (0.97%), and Corning Inc (0.95%) have a slightly smaller but still significant weight. Willis Towers Watson PLC and D.R. Horton Inc are also represented in the VOE’s holdings at 0.9% and 0.89%.

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Risk Analysis

IWD VOE
Mean Return 1.03 1.05
R-squared 92.38 88.76
Std. Deviation 14.35 15.98
Alpha -3.23 -3.77
Beta 1.02 1.11
Sharpe Ratio 0.81 0.75
Treynor Ratio 11.06 10.19

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

The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a Sharpe Ratio of 0.75 with a Beta of 1.11 and a Alpha of -3.77. Its Mean Return is 1.05 while VOE’s Standard Deviation is 15.98. Furthermore, the fund has a Treynor Ratio of 10.19 and a R-squared of 88.76.

IWD’s Mean Return is 0.02 points lower than that of VOE and its R-squared is 3.62 points higher. With a Standard Deviation of 14.35, IWD is slightly less volatile than VOE. The Alpha and Beta of IWD are 0.54 points higher and 0.09 points lower than VOE’s Alpha and Beta.

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Performance

Annual Returns

IWD vs. VOE - Annual Returns

Year IWD VOE
2020 2.67% 2.5%
2019 26.34% 27.98%
2018 -8.4% -12.41%
2017 13.47% 17.05%
2016 17.09% 15.26%
2015 -3.95% -1.8%
2014 13.21% 13.98%
2013 32.18% 37.65%
2012 17.28% 16.04%
2011 0.21% -0.32%
2010 15.3% 21.83%

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 VOE, returning 37.65% on an annual basis. The poorest year for VOE in the last ten years was 2018, with a yield of -12.41%. Most years the Vanguard Mid-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 13.98%, 15.26%, and 16.04% respectively.

Portfolio Growth

IWD vs. VOE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWD $10,000 $30,746 11.40%
VOE $10,000 $33,655 12.52%

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 VOE, the end total would have been $33,655. This equates to a $23,655 profit over 11 years and a compound annual growth rate (CAGR) of 12.52%.

IWD’s CAGR is 1.12 percentage points lower than that of VOE and as a result, would have yielded $2,909 less on a $10,000 investment. Thus, IWD performed worse than VOE by 1.12% annually.


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