IWF vs. VB: What’s The Difference?

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

The expense ratio of IWF is 0.14 percentage points higher than VB’s (0.19% vs. 0.05%). IWF also has a higher exposure to the technology sector and a lower standard deviation. Overall, IWF has provided higher returns than VB over the past ten years.

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

Summary

IWF VB
Name iShares Russell 1000 Growth ETF Vanguard Small-Cap Index Fund ETF Shares
Category Large Growth Small Blend
Issuer iShares Vanguard
AUM 72.16B 137.72B
Avg. Return 17.72% 14.25%
Div. Yield 0.52% 1.14%
Expense Ratio 0.19% 0.05%

The iShares Russell 1000 Growth ETF (IWF) is a Large Growth fund that is issued by iShares. It currently has 72.16B total assets under management and has yielded an average annual return of 17.72% over the past 10 years. The fund has a dividend yield of 0.52% with an expense ratio of 0.19%.

The Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.05%.

IWF’s dividend yield is 0.62% lower than that of VB (0.52% vs. 1.14%). Also, IWF yielded on average 3.47% more per year over the past decade (17.72% vs. 14.25%). The expense ratio of IWF is 0.14 percentage points higher than VB’s (0.19% vs. 0.05%).

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Fund Composition

Industry Exposure

IWF vs. VB - Industry Exposure

IWF VB
Technology 39.29% 16.85%
Industrials 6.19% 16.11%
Energy 0.28% 3.67%
Communication Services 12.82% 2.4%
Utilities 0.03% 2.19%
Healthcare 9.23% 14.34%
Consumer Defensive 4.31% 4.14%
Real Estate 1.85% 9.56%
Financial Services 7.36% 13.06%
Consumer Cyclical 17.62% 13.03%
Basic Materials 1.01% 4.63%

The iShares Russell 1000 Growth ETF (IWF) has the most exposure to the Technology sector at 39.29%. This is followed by Consumer Cyclical and Communication Services at 17.62% and 12.82% respectively. Energy (0.28%), Basic Materials (1.01%), and Real Estate (1.85%) only make up 3.14% of the fund’s total assets.

IWF’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Communication Services stocks at 4.31%, 6.19%, 7.36%, 9.23%, and 12.82%.

The Vanguard Small-Cap Index Fund ETF Shares (VB) has the most exposure to the Technology sector at 16.85%. This is followed by Industrials and Healthcare at 16.11% and 14.34% respectively. Communication Services (2.4%), Energy (3.67%), and Consumer Defensive (4.14%) only make up 10.21% of the fund’s total assets.

VB’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Healthcare stocks at 4.63%, 9.56%, 13.03%, 13.06%, and 14.34%.

IWF is 22.44% more exposed to the Technology sector than VB (39.29% vs 16.85%). IWF’s exposure to Consumer Cyclical and Communication Services stocks is 4.59% higher and 10.42% higher respectively (17.62% vs. 13.03% and 12.82% vs. 2.4%). In total, Energy, Basic Materials, and Real Estate also make up 14.72% less of the fund’s holdings compared to VB (3.14% vs. 17.86%).

Holdings

IWF - Holdings

IWF Holdings Weight
Apple Inc 10.51%
Microsoft Corp 9.85%
Amazon.com Inc 6.63%
Facebook Inc Class A 3.91%
Alphabet Inc Class A 3.2%
Alphabet Inc Class C 3.03%
Tesla Inc 2.45%
NVIDIA Corp 2.14%
Visa Inc Class A 1.91%
The Home Depot Inc 1.62%

IWF’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.51%, 9.85%, 6.63%, 3.91%, and 3.2%.

Alphabet Inc Class C (3.03%), Tesla Inc (2.45%), and NVIDIA Corp (2.14%) have a slightly smaller but still significant weight. Visa Inc Class A and The Home Depot Inc are also represented in the IWF’s holdings at 1.91% and 1.62%.

VB - Holdings

VB Holdings Weight
Charles River Laboratories International Inc 0.34%
Pool Corp 0.32%
Bio-Techne Corp 0.32%
Avantor Inc 0.32%
PerkinElmer Inc 0.31%
Diamondback Energy Inc 0.31%
VICI Properties Inc Ordinary Shares 0.3%
IDEX Corp 0.3%
Entegris Inc 0.3%
Novavax Inc 0.29%

VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.

Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.

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Risk Analysis

IWF VB
Mean Return 1.48 1.15
R-squared 92.93 85.03
Std. Deviation 14.42 17.82
Alpha 2.16 -4.02
Beta 1.03 1.21
Sharpe Ratio 1.19 0.74
Treynor Ratio 17.1 10.15

The iShares Russell 1000 Growth ETF (IWF) has a Beta of 1.03 with a Mean Return of 1.48 and a Sharpe Ratio of 1.19. Its R-squared is 92.93 while IWF’s Standard Deviation is 14.42. Furthermore, the fund has a Alpha of 2.16 and a Treynor Ratio of 17.1.

The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Alpha of -4.02 with a Standard Deviation of 17.82 and a Sharpe Ratio of 0.74. Its Beta is 1.21 while VB’s Mean Return is 1.15. Furthermore, the fund has a Treynor Ratio of 10.15 and a R-squared of 85.03.

IWF’s Mean Return is 0.33 points higher than that of VB and its R-squared is 7.90 points higher. With a Standard Deviation of 14.42, IWF is slightly less volatile than VB. The Alpha and Beta of IWF are 6.18 points higher and 0.18 points lower than VB’s Alpha and Beta.

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Performance

Annual Returns

IWF vs. VB - Annual Returns

Year IWF VB
2020 38.21% 19.08%
2019 36.08% 27.37%
2018 -1.68% -9.3%
2017 29.96% 16.24%
2016 6.92% 18.31%
2015 5.48% -3.65%
2014 12.84% 7.51%
2013 33.19% 37.8%
2012 15.03% 18.22%
2011 2.47% -2.68%
2010 16.47% 27.89%

IWF had its best year in 2020 with an annual return of 38.21%. IWF’s worst year over the past decade yielded -1.68% and occurred in 2018. In most years the iShares Russell 1000 Growth ETF provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 12.84%, 15.03%, and 16.47% respectively.

The year 2013 was the strongest year for VB, returning 37.8% on an annual basis. The poorest year for VB in the last ten years was 2018, with a yield of -9.3%. Most years the Vanguard Small-Cap Index Fund ETF Shares has given investors modest returns, such as in 2017, 2012, and 2016, when gains were 16.24%, 18.22%, and 18.31% respectively.

Portfolio Growth

IWF vs. VB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWF $10,000 $55,920 17.72%
VB $10,000 $39,734 14.25%

A $10,000 investment in IWF would have resulted in a final balance of $55,920. This is a profit of $45,920 over 11 years and amounts to a compound annual growth rate (CAGR) of 17.72%.

With a $10,000 investment in VB, the end total would have been $39,734. This equates to a $29,734 profit over 11 years and a compound annual growth rate (CAGR) of 14.25%.

IWF’s CAGR is 3.47 percentage points higher than that of VB and as a result, would have yielded $16,186 more on a $10,000 investment. Thus, IWF outperformed VB by 3.47% annually.


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