The iShares Russell 1000 Value ETF (IWD) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between IWD and VTIP? And which fund is better?
The expense ratio of IWD is 0.14 percentage points higher than VTIP’s (0.19% vs. 0.05%). IWD also has a high exposure to the financial services sector while VTIP is mostly comprised of AAA bonds. Overall, IWD has provided higher returns than VTIP over the past ten years.
In this article, we’ll compare IWD vs. VTIP. We’ll look at portfolio growth and industry exposure, as well as at their risk metrics and holdings. Moreover, I’ll also discuss IWD’s and VTIP’s fund composition, annual returns, and performance and examine how these affect their overall returns.
Summary
| IWD | VTIP | |
| Name | iShares Russell 1000 Value ETF | Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares |
| Category | Large Value | Inflation-Protected Bond |
| Issuer | iShares | Vanguard |
| AUM | 54.1B | 50.67B |
| Avg. Return | 11.40% | 1.79% |
| Div. Yield | 1.57% | 1.35% |
| Expense Ratio | 0.19% | 0.05% |
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 Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.
IWD’s dividend yield is 0.22% higher than that of VTIP (1.57% vs. 1.35%). Also, IWD yielded on average 9.61% more per year over the past decade (11.40% vs. 1.79%). The expense ratio of IWD is 0.14 percentage points higher than VTIP’s (0.19% vs. 0.05%).
Fund Composition
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%.
| VTIP Bond Sectors | Weight |
| AAA | 99.87% |
| Others | 0.13% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
Risk Analysis
| IWD | VTIP | |
| 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 Mean Return of 1.03 with a Standard Deviation of 14.35 and a Alpha of -3.23. Its Beta is 1.02 while IWD’s Treynor Ratio is 11.06. Furthermore, the fund has a Sharpe Ratio of 0.81 and a R-squared of 92.38.
The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Sharpe Ratio of 0 with a Standard Deviation of 0 and a Alpha of 0. Its Treynor Ratio is 0 while VTIP’s Mean Return is 0. Furthermore, the fund has a R-squared of 0 and a Beta of 0.
IWD’s Mean Return is 1.03 points higher than that of VTIP and its R-squared is 92.38 points higher. With a Standard Deviation of 14.35, IWD is slightly more volatile than VTIP. The Alpha and Beta of IWD are 3.23 points lower and 1.02 points higher than VTIP’s Alpha and Beta.
Performance
Annual Returns
| Year | IWD | VTIP |
| 2020 | 2.67% | 4.97% |
| 2019 | 26.34% | 4.83% |
| 2018 | -8.4% | 0.54% |
| 2017 | 13.47% | 0.82% |
| 2016 | 17.09% | 2.71% |
| 2015 | -3.95% | -0.15% |
| 2014 | 13.21% | -1.17% |
| 2013 | 32.18% | -1.55% |
| 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 2020 was the strongest year for VTIP, returning 4.97% on an annual basis. The poorest year for VTIP in the last ten years was 2013, with a yield of -1.55%. Most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 0.54% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWD | $10,000 | $17,165 | 11.40% |
| VTIP | $10,000 | $11,305 | 1.79% |
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 VTIP, the end total would have been $11,305. This equates to a $1,305 profit over 7 years and a compound annual growth rate (CAGR) of 1.79%.
IWD’s CAGR is 9.61 percentage points higher than that of VTIP and as a result, would have yielded $5,860 more on a $10,000 investment. Thus, IWD outperformed VTIP by 9.61% annually.
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