The iShares Russell 1000 Value ETF (IWD) and the Vanguard High Dividend Yield Index Fund ETF Shares (VYM) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and VYM is a Vanguard Large Value fund. So, what’s the difference between IWD and VYM? And which fund is better?
The expense ratio of IWD is 0.13 percentage points higher than VYM’s (0.19% vs. 0.06%). IWD also has a lower exposure to the financial services sector and a higher standard deviation. Overall, IWD has provided lower returns than VYM over the past ten years.
In this article, we’ll compare IWD vs. VYM. We’ll look at annual returns and risk metrics, as well as at their performance and portfolio growth. Moreover, I’ll also discuss IWD’s and VYM’s industry exposure, fund composition, and holdings and examine how these affect their overall returns.
Summary
| IWD | VYM | |
| Name | iShares Russell 1000 Value ETF | Vanguard High Dividend Yield Index Fund ETF Shares |
| Category | Large Value | Large Value |
| Issuer | iShares | Vanguard |
| AUM | 54.1B | 48.5B |
| Avg. Return | 11.40% | 12.20% |
| Div. Yield | 1.57% | 2.79% |
| 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 High Dividend Yield Index Fund ETF Shares (VYM) is a Large Value fund that is issued by Vanguard. It currently has 48.5B total assets under management and has yielded an average annual return of 12.20% over the past 10 years. The fund has a dividend yield of 2.79% with an expense ratio of 0.06%.
IWD’s dividend yield is 1.22% lower than that of VYM (1.57% vs. 2.79%). Also, IWD yielded on average 0.80% less per year over the past decade (11.40% vs. 12.20%). The expense ratio of IWD is 0.13 percentage points higher than VYM’s (0.19% vs. 0.06%).
Fund Composition
Industry Exposure
| IWD | VYM | |
| Technology | 10.28% | 9.77% |
| Industrials | 11.77% | 10.14% |
| Energy | 4.76% | 7.12% |
| Communication Services | 8.67% | 5.91% |
| Utilities | 4.88% | 7.27% |
| Healthcare | 17.78% | 13.61% |
| Consumer Defensive | 7.76% | 14.13% |
| Real Estate | 4.94% | 0.02% |
| Financial Services | 20.43% | 22.05% |
| Consumer Cyclical | 5.62% | 5.57% |
| Basic Materials | 3.1% | 4.41% |
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 High Dividend Yield Index Fund ETF Shares (VYM) has the most exposure to the Financial Services sector at 22.05%. This is followed by Consumer Defensive and Healthcare at 14.13% and 13.61% respectively. Basic Materials (4.41%), Consumer Cyclical (5.57%), and Communication Services (5.91%) only make up 15.89% of the fund’s total assets.
VYM’s mid-section with moderate exposure is comprised of Energy, Utilities, Technology, Industrials, and Healthcare stocks at 7.12%, 7.27%, 9.77%, 10.14%, and 13.61%.
IWD is 1.62% less exposed to the Financial Services sector than VYM (20.43% vs 22.05%). IWD’s exposure to Healthcare and Industrials stocks is 4.17% higher and 1.63% higher respectively (17.78% vs. 13.61% and 11.77% vs. 10.14%). In total, Energy, Utilities, and Real Estate also make up 0.17% more of the fund’s holdings compared to VYM (14.58% vs. 14.41%).
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%.
| VYM Holdings | Weight |
| JPMorgan Chase & Co | 3.53% |
| Johnson & Johnson | 3.28% |
| The Home Depot Inc | 2.59% |
| Procter & Gamble Co | 2.48% |
| Bank of America Corp | 2.35% |
| Exxon Mobil Corp | 2.02% |
| Comcast Corp Class A | 1.96% |
| Verizon Communications Inc | 1.75% |
| Intel Corp | 1.71% |
| Cisco Systems Inc | 1.69% |
VYM’s Top Holdings are JPMorgan Chase & Co, Johnson & Johnson, The Home Depot Inc, Procter & Gamble Co, and Bank of America Corp at 3.53%, 3.28%, 2.59%, 2.48%, and 2.35%.
Exxon Mobil Corp (2.02%), Comcast Corp Class A (1.96%), and Verizon Communications Inc (1.75%) have a slightly smaller but still significant weight. Intel Corp and Cisco Systems Inc are also represented in the VYM’s holdings at 1.71% and 1.69%.
Risk Analysis
| IWD | VYM | |
| Mean Return | 1.03 | 1.04 |
| R-squared | 92.38 | 88.88 |
| Std. Deviation | 14.35 | 12.69 |
| Alpha | -3.23 | -0.7 |
| Beta | 1.02 | 0.88 |
| Sharpe Ratio | 0.81 | 0.93 |
| Treynor Ratio | 11.06 | 13.24 |
The iShares Russell 1000 Value ETF (IWD) has a Standard Deviation of 14.35 with a Sharpe Ratio of 0.81 and a Treynor Ratio of 11.06. Its R-squared is 92.38 while IWD’s Mean Return is 1.03. Furthermore, the fund has a Alpha of -3.23 and a Beta of 1.02.
The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Mean Return of 1.04 with a Alpha of -0.7 and a Standard Deviation of 12.69. Its Sharpe Ratio is 0.93 while VYM’s Treynor Ratio is 13.24. Furthermore, the fund has a Beta of 0.88 and a R-squared of 88.88.
IWD’s Mean Return is 0.01 points lower than that of VYM and its R-squared is 3.50 points higher. With a Standard Deviation of 14.35, IWD is slightly more volatile than VYM. The Alpha and Beta of IWD are 2.53 points lower and 0.14 points higher than VYM’s Alpha and Beta.
Performance
Annual Returns
| Year | IWD | VYM |
| 2020 | 2.67% | 1.14% |
| 2019 | 26.34% | 24.2% |
| 2018 | -8.4% | -5.87% |
| 2017 | 13.47% | 16.42% |
| 2016 | 17.09% | 16.87% |
| 2015 | -3.95% | 0.33% |
| 2014 | 13.21% | 13.47% |
| 2013 | 32.18% | 30.26% |
| 2012 | 17.28% | 12.68% |
| 2011 | 0.21% | 10.5% |
| 2010 | 15.3% | 14.17% |
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 VYM, returning 30.26% on an annual basis. The poorest year for VYM in the last ten years was 2018, with a yield of -5.87%. Most years the Vanguard High Dividend Yield Index Fund ETF Shares has given investors modest returns, such as in 2012, 2014, and 2010, when gains were 12.68%, 13.47%, and 14.17% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWD | $10,000 | $30,746 | 11.40% |
| VYM | $10,000 | $33,914 | 12.20% |
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 VYM, the end total would have been $33,914. This equates to a $23,914 profit over 11 years and a compound annual growth rate (CAGR) of 12.20%.
IWD’s CAGR is 0.80 percentage points lower than that of VYM and as a result, would have yielded $3,168 less on a $10,000 investment. Thus, IWD performed worse than VYM by 0.80% annually.
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