IWF vs. VGK: What’s The Difference?

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

The expense ratio of IWF is 0.11 percentage points higher than VGK’s (0.19% vs. 0.08%). IWF also has a higher exposure to the technology sector and a lower standard deviation. Overall, IWF has provided higher returns than VGK over the past ten years.

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

Summary

IWF VGK
Name iShares Russell 1000 Growth ETF Vanguard FTSE Europe Index Fund ETF Shares
Category Large Growth Europe Stock
Issuer iShares Vanguard
AUM 72.16B 25.7B
Avg. Return 17.72% 6.68%
Div. Yield 0.52% 2.52%
Expense Ratio 0.19% 0.08%

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 FTSE Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% with an expense ratio of 0.08%.

IWF’s dividend yield is 2.00% lower than that of VGK (0.52% vs. 2.52%). Also, IWF yielded on average 11.05% more per year over the past decade (17.72% vs. 6.68%). The expense ratio of IWF is 0.11 percentage points higher than VGK’s (0.19% vs. 0.08%).

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Fund Composition

Industry Exposure

IWF vs. VGK - Industry Exposure

IWF VGK
Technology 39.29% 8.3%
Industrials 6.19% 15.58%
Energy 0.28% 4.3%
Communication Services 12.82% 5.09%
Utilities 0.03% 3.89%
Healthcare 9.23% 13.76%
Consumer Defensive 4.31% 11.39%
Real Estate 1.85% 2.57%
Financial Services 7.36% 15.85%
Consumer Cyclical 17.62% 11.6%
Basic Materials 1.01% 7.67%

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 FTSE Europe Index Fund ETF Shares (VGK) has the most exposure to the Financial Services sector at 15.85%. This is followed by Industrials and Healthcare at 15.58% and 13.76% respectively. Utilities (3.89%), Energy (4.3%), and Communication Services (5.09%) only make up 13.28% of the fund’s total assets.

VGK’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.67%, 8.3%, 11.39%, 11.6%, and 13.76%.

IWF is 30.99% more exposed to the Technology sector than VGK (39.29% vs 8.3%). IWF’s exposure to Consumer Cyclical and Communication Services stocks is 6.02% higher and 7.73% higher respectively (17.62% vs. 11.6% and 12.82% vs. 5.09%). In total, Energy, Basic Materials, and Real Estate also make up 11.40% less of the fund’s holdings compared to VGK (3.14% vs. 14.54%).

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%.

VGK - Holdings

VGK Holdings Weight
Nestle SA 2.82%
ASML Holding NV 2.2%
Roche Holding AG 2.13%
LVMH Moet Hennessy Louis Vuitton SE 1.58%
Novartis AG 1.55%
AstraZeneca PLC 1.27%
SAP SE 1.25%
Unilever PLC 1.23%
Novo Nordisk A/S B 1.09%
Siemens AG 0.96%

VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.

AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.

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Risk Analysis

IWF VGK
Mean Return 1.48 0.61
R-squared 92.93 92.76
Std. Deviation 14.42 16.65
Alpha 2.16 0.45
Beta 1.03 1.06
Sharpe Ratio 1.19 0.4
Treynor Ratio 17.1 5.12

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

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Treynor Ratio of 5.12 with a Alpha of 0.45 and a R-squared of 92.76. Its Sharpe Ratio is 0.4 while VGK’s Standard Deviation is 16.65. Furthermore, the fund has a Beta of 1.06 and a Mean Return of 0.61.

IWF’s Mean Return is 0.87 points higher than that of VGK and its R-squared is 0.17 points higher. With a Standard Deviation of 14.42, IWF is slightly less volatile than VGK. The Alpha and Beta of IWF are 1.71 points higher and 0.03 points lower than VGK’s Alpha and Beta.

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Performance

Annual Returns

IWF vs. VGK - Annual Returns

Year IWF VGK
2020 38.21% 6.5%
2019 36.08% 24.26%
2018 -1.68% -14.79%
2017 29.96% 27.06%
2016 6.92% -0.59%
2015 5.48% -1.87%
2014 12.84% -6.56%
2013 33.19% 24.93%
2012 15.03% 21.01%
2011 2.47% -11.49%
2010 16.47% 5.01%

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 2017 was the strongest year for VGK, returning 27.06% on an annual basis. The poorest year for VGK in the last ten years was 2018, with a yield of -14.79%. Most years the Vanguard FTSE Europe Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were -0.59%, 5.01%, and 6.5% respectively.

Portfolio Growth

IWF vs. VGK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWF $10,000 $55,920 17.72%
VGK $10,000 $18,350 6.68%

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 VGK, the end total would have been $18,350. This equates to a $8,350 profit over 11 years and a compound annual growth rate (CAGR) of 6.68%.

IWF’s CAGR is 11.05 percentage points higher than that of VGK and as a result, would have yielded $37,570 more on a $10,000 investment. Thus, IWF outperformed VGK by 11.05% annually.


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