IWD vs. VXF: What’s The Difference?

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

The expense ratio of IWD is 0.13 percentage points higher than VXF’s (0.19% vs. 0.06%). IWD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, IWD has provided lower returns than VXF over the past ten years.

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

Summary

IWD VXF
Name iShares Russell 1000 Value ETF Vanguard Extended Market Index Fund ETF Shares
Category Large Value Mid-Cap Growth
Issuer iShares Vanguard
AUM 54.1B 114.53B
Avg. Return 11.40% 15.47%
Div. Yield 1.57% 1.19%
Expense Ratio 0.19% 0.06%

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 Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.

IWD’s dividend yield is 0.38% higher than that of VXF (1.57% vs. 1.19%). Also, IWD yielded on average 4.07% less per year over the past decade (11.40% vs. 15.47%). The expense ratio of IWD is 0.13 percentage points higher than VXF’s (0.19% vs. 0.06%).

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Fund Composition

Industry Exposure

IWD vs. VXF - Industry Exposure

IWD VXF
Technology 10.28% 23.61%
Industrials 11.77% 11.31%
Energy 4.76% 2.46%
Communication Services 8.67% 7.29%
Utilities 4.88% 1.65%
Healthcare 17.78% 15.25%
Consumer Defensive 7.76% 3.09%
Real Estate 4.94% 8.16%
Financial Services 20.43% 12.56%
Consumer Cyclical 5.62% 11.35%
Basic Materials 3.1% 3.26%

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 Extended Market Index Fund ETF Shares (VXF) has the most exposure to the Technology sector at 23.61%. This is followed by Healthcare and Financial Services at 15.25% and 12.56% respectively. Energy (2.46%), Consumer Defensive (3.09%), and Basic Materials (3.26%) only make up 8.81% of the fund’s total assets.

VXF’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Industrials, Consumer Cyclical, and Financial Services stocks at 7.29%, 8.16%, 11.31%, 11.35%, and 12.56%.

IWD is 7.87% more exposed to the Financial Services sector than VXF (20.43% vs 12.56%). IWD’s exposure to Healthcare and Industrials stocks is 2.53% higher and 0.46% higher respectively (17.78% vs. 15.25% and 11.77% vs. 11.31%). In total, Energy, Utilities, and Real Estate also make up 2.31% more of the fund’s holdings compared to VXF (14.58% vs. 12.27%).

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%.

VXF - Holdings

VXF Holdings Weight
Square Inc A 1.2%
Zoom Video Communications Inc 1.04%
Uber Technologies Inc 0.93%
Moderna Inc 0.9%
Blackstone Group Inc 0.83%
Snap Inc Class A 0.8%
Twilio Inc A 0.73%
DocuSign Inc 0.68%
CrowdStrike Holdings Inc Class A 0.63%
Marvell Technology Inc 0.6%

VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.

Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.

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Risk Analysis

IWD VXF
Mean Return 1.03 1.24
R-squared 92.38 85.73
Std. Deviation 14.35 18.04
Alpha -3.23 -3.26
Beta 1.02 1.23
Sharpe Ratio 0.81 0.79
Treynor Ratio 11.06 10.92

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

The Vanguard Extended Market Index Fund ETF Shares (VXF) has a Treynor Ratio of 10.92 with a Mean Return of 1.24 and a R-squared of 85.73. Its Alpha is -3.26 while VXF’s Beta is 1.23. Furthermore, the fund has a Sharpe Ratio of 0.79 and a Standard Deviation of 18.04.

IWD’s Mean Return is 0.21 points lower than that of VXF and its R-squared is 6.65 points higher. With a Standard Deviation of 14.35, IWD is slightly less volatile than VXF. The Alpha and Beta of IWD are 0.03 points higher and 0.21 points lower than VXF’s Alpha and Beta.

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Performance

Annual Returns

IWD vs. VXF - Annual Returns

Year IWD VXF
2020 2.67% 32.19%
2019 26.34% 28.04%
2018 -8.4% -9.37%
2017 13.47% 18.1%
2016 17.09% 16.16%
2015 -3.95% -3.26%
2014 13.21% 7.55%
2013 32.18% 38.37%
2012 17.28% 18.48%
2011 0.21% -3.61%
2010 15.3% 27.55%

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 VXF, returning 38.37% on an annual basis. The poorest year for VXF in the last ten years was 2018, with a yield of -9.37%. Most years the Vanguard Extended Market Index Fund ETF Shares has given investors modest returns, such as in 2016, 2017, and 2012, when gains were 16.16%, 18.1%, and 18.48% respectively.

Portfolio Growth

IWD vs. VXF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWD $10,000 $30,746 11.40%
VXF $10,000 $44,130 15.47%

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 VXF, the end total would have been $44,130. This equates to a $34,130 profit over 11 years and a compound annual growth rate (CAGR) of 15.47%.

IWD’s CAGR is 4.07 percentage points lower than that of VXF and as a result, would have yielded $13,384 less on a $10,000 investment. Thus, IWD performed worse than VXF by 4.07% annually.


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