The iShares Russell 1000 Growth ETF (IWF) and the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) are both among the Top 100 ETFs. IWF is a iShares Large Growth fund and VCIT is a Vanguard Corporate Bond fund. So, what’s the difference between IWF and VCIT? And which fund is better?
The expense ratio of IWF is 0.14 percentage points higher than VCIT’s (0.19% vs. 0.05%). IWF also has a high exposure to the technology sector while VCIT is mostly comprised of BBB bonds. Overall, IWF has provided higher returns than VCIT over the past ten years.
In this article, we’ll compare IWF vs. VCIT. We’ll look at fund composition and performance, as well as at their risk metrics and annual returns. Moreover, I’ll also discuss IWF’s and VCIT’s holdings, industry exposure, and portfolio growth and examine how these affect their overall returns.
|Name||iShares Russell 1000 Growth ETF||Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares|
|Category||Large Growth||Corporate Bond|
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 Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) is a Corporate Bond fund that is issued by Vanguard. It currently has 48.39B total assets under management and has yielded an average annual return of 5.84% over the past 10 years. The fund has a dividend yield of 2.33% with an expense ratio of 0.05%.
IWF’s dividend yield is 1.81% lower than that of VCIT (0.52% vs. 2.33%). Also, IWF yielded on average 11.88% more per year over the past decade (17.72% vs. 5.84%). The expense ratio of IWF is 0.14 percentage points higher than VCIT’s (0.19% vs. 0.05%).
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|Facebook Inc Class A||3.91%|
|Alphabet Inc Class A||3.2%|
|Alphabet Inc Class C||3.03%|
|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%.
|VCIT Bond Sectors||Weight|
VCIT’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and Below B at 55.28%, 37.85%, 5.22%, 1.57%, and 0.08%. The fund is less weighted towards Others (0.0%), B (0.0%), and BB (0.0%) rated bonds.
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The iShares Russell 1000 Growth ETF (IWF) has a Mean Return of 1.48 with a Treynor Ratio of 17.1 and a Beta of 1.03. Its Standard Deviation is 14.42 while IWF’s Alpha is 2.16. Furthermore, the fund has a Sharpe Ratio of 1.19 and a R-squared of 92.93.
The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a R-squared of 63.18 with a Standard Deviation of 5.08 and a Treynor Ratio of 3.43. Its Sharpe Ratio is 0.91 while VCIT’s Mean Return is 0.44. Furthermore, the fund has a Beta of 1.35 and a Alpha of 0.89.
IWF’s Mean Return is 1.04 points higher than that of VCIT and its R-squared is 29.75 points higher. With a Standard Deviation of 14.42, IWF is slightly more volatile than VCIT. The Alpha and Beta of IWF are 1.27 points higher and 0.32 points lower than VCIT’s Alpha and Beta.
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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 2019 was the strongest year for VCIT, returning 13.97% on an annual basis. The poorest year for VCIT in the last ten years was 2013, with a yield of -1.8%. Most years the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2011, when gains were 5.5%, 7.47%, and 7.94% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IWF would have resulted in a final balance of $48,012. This is a profit of $38,012 over 10 years and amounts to a compound annual growth rate (CAGR) of 17.72%.
With a $10,000 investment in VCIT, the end total would have been $17,439. This equates to a $7,439 profit over 10 years and a compound annual growth rate (CAGR) of 5.84%.
IWF’s CAGR is 11.88 percentage points higher than that of VCIT and as a result, would have yielded $30,573 more on a $10,000 investment. Thus, IWF outperformed VCIT by 11.88% annually.
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