IWF vs. VBR: What’s The Difference?

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

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

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

Summary

IWF VBR
Name iShares Russell 1000 Growth ETF Vanguard Small-Cap Value Index Fund ETF Shares
Category Large Growth Small Value
Issuer iShares Vanguard
AUM 72.16B 48.08B
Avg. Return 17.72% 12.28%
Div. Yield 0.52% 1.6%
Expense Ratio 0.19% 0.07%

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 Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.

IWF’s dividend yield is 1.08% lower than that of VBR (0.52% vs. 1.6%). Also, IWF yielded on average 5.44% more per year over the past decade (17.72% vs. 12.28%). The expense ratio of IWF is 0.12 percentage points higher than VBR’s (0.19% vs. 0.07%).

Fund Composition

Industry Exposure

IWF vs. VBR - Industry Exposure

IWF VBR
Technology 39.29% 8.39%
Industrials 6.19% 18.44%
Energy 0.28% 5.15%
Communication Services 12.82% 1.77%
Utilities 0.03% 3.65%
Healthcare 9.23% 7.16%
Consumer Defensive 4.31% 4.36%
Real Estate 1.85% 10.92%
Financial Services 7.36% 20.04%
Consumer Cyclical 17.62% 13.82%
Basic Materials 1.01% 6.31%

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 Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.

VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.

IWF is 30.90% more exposed to the Technology sector than VBR (39.29% vs 8.39%). IWF’s exposure to Consumer Cyclical and Communication Services stocks is 3.80% higher and 11.05% higher respectively (17.62% vs. 13.82% and 12.82% vs. 1.77%). In total, Energy, Basic Materials, and Real Estate also make up 19.24% less of the fund’s holdings compared to VBR (3.14% vs. 22.38%).

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%.

VBR - Holdings

VBR Holdings Weight
Diamondback Energy Inc 0.55%
VICI Properties Inc Ordinary Shares 0.54%
IDEX Corp 0.54%
Nuance Communications Inc 0.5%
Molina Healthcare Inc 0.48%
Signature Bank 0.46%
Novavax Inc 0.44%
Howmet Aerospace Inc 0.44%
Apollo Global Management Inc Class A 0.42%
Brown & Brown Inc 0.41%

VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.

Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.

Risk Analysis

IWF VBR
Mean Return 1.48 1.08
R-squared 92.93 82.2
Std. Deviation 14.42 18.37
Alpha 2.16 -5.09
Beta 1.03 1.23
Sharpe Ratio 1.19 0.67
Treynor Ratio 17.1 9.15

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

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Beta of 1.23 with a Mean Return of 1.08 and a R-squared of 82.2. Its Sharpe Ratio is 0.67 while VBR’s Standard Deviation is 18.37. Furthermore, the fund has a Alpha of -5.09 and a Treynor Ratio of 9.15.

IWF’s Mean Return is 0.40 points higher than that of VBR and its R-squared is 10.73 points higher. With a Standard Deviation of 14.42, IWF is slightly less volatile than VBR. The Alpha and Beta of IWF are 7.25 points higher and 0.20 points lower than VBR’s Alpha and Beta.

Performance

Annual Returns

IWF vs. VBR - Annual Returns

Year IWF VBR
2020 38.21% 5.82%
2019 36.08% 22.76%
2018 -1.68% -12.22%
2017 29.96% 11.79%
2016 6.92% 24.8%
2015 5.48% -4.67%
2014 12.84% 10.55%
2013 33.19% 36.57%
2012 15.03% 18.78%
2011 2.47% -4.05%
2010 16.47% 24.97%

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 VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% respectively.

Portfolio Growth

IWF vs. VBR - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWF $10,000 $55,920 17.72%
VBR $10,000 $32,611 12.28%

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 VBR, the end total would have been $32,611. This equates to a $22,611 profit over 11 years and a compound annual growth rate (CAGR) of 12.28%.

IWF’s CAGR is 5.44 percentage points higher than that of VBR and as a result, would have yielded $23,309 more on a $10,000 investment. Thus, IWF outperformed VBR by 5.44% annually.


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