The iShares Russell 1000 Growth ETF (IWF) and the Vanguard Real Estate Index Fund ETF Shares (VNQ) are both among the Top 100 ETFs. IWF is a iShares Large Growth fund and VNQ is a Vanguard Real Estate fund. So, what’s the difference between IWF and VNQ? And which fund is better?
The expense ratio of IWF is 0.07 percentage points higher than VNQ’s (0.19% vs. 0.12%). IWF also has a higher exposure to the technology sector and a lower standard deviation. Overall, IWF has provided higher returns than VNQ over the past ten years.
In this article, we’ll compare IWF vs. VNQ. We’ll look at fund composition and holdings, as well as at their risk metrics and performance. Moreover, I’ll also discuss IWF’s and VNQ’s industry exposure, portfolio growth, and annual returns and examine how these affect their overall returns.
|Name||iShares Russell 1000 Growth ETF||Vanguard Real Estate Index Fund ETF Shares|
|Category||Large Growth||Real Estate|
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 Real Estate Index Fund ETF Shares (VNQ) is a Real Estate fund that is issued by Vanguard. It currently has 77.34B total assets under management and has yielded an average annual return of 11.05% over the past 10 years. The fund has a dividend yield of 2.34% with an expense ratio of 0.12%.
IWF’s dividend yield is 1.82% lower than that of VNQ (0.52% vs. 2.34%). Also, IWF yielded on average 6.68% more per year over the past decade (17.72% vs. 11.05%). The expense ratio of IWF is 0.07 percentage points higher than VNQ’s (0.19% vs. 0.12%).
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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 Real Estate Index Fund ETF Shares (VNQ) has the most exposure to the Real Estate sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
VNQ’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
IWF is 39.29% more exposed to the Technology sector than VNQ (39.29% vs 0.0%). IWF’s exposure to Consumer Cyclical and Communication Services stocks is 17.62% higher and 12.82% higher respectively (17.62% vs. 0.0% and 12.82% vs. 0.0%). In total, Energy, Basic Materials, and Real Estate also make up 96.86% less of the fund’s holdings compared to VNQ (3.14% vs. 100.00%).
|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%.
|Vanguard Real Estate II Index||11.62%|
|American Tower Corp||7.24%|
|Crown Castle International Corp||5.01%|
|Simon Property Group Inc||2.52%|
|Digital Realty Trust Inc||2.49%|
|SBA Communications Corp||2.1%|
VNQ’s Top Holdings are Vanguard Real Estate II Index, American Tower Corp, Prologis Inc, Crown Castle International Corp, and Equinix Inc at 11.62%, 7.24%, 5.33%, 5.01%, and 4.3%.
Public Storage (2.85%), Simon Property Group Inc (2.52%), and Digital Realty Trust Inc (2.49%) have a slightly smaller but still significant weight. SBA Communications Corp and Welltower Inc are also represented in the VNQ’s holdings at 2.1% and 2.09%.
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The iShares Russell 1000 Growth ETF (IWF) has a Alpha of 2.16 with a Mean Return of 1.48 and a R-squared of 92.93. Its Sharpe Ratio is 1.19 while IWF’s Standard Deviation is 14.42. Furthermore, the fund has a Treynor Ratio of 17.1 and a Beta of 1.03.
The Vanguard Real Estate Index Fund ETF Shares (VNQ) has a Alpha of 2.47 with a Treynor Ratio of 11.9 and a Mean Return of 0.89. Its Beta is 0.76 while VNQ’s Sharpe Ratio is 0.62. Furthermore, the fund has a Standard Deviation of 16.13 and a R-squared of 44.4.
IWF’s Mean Return is 0.59 points higher than that of VNQ and its R-squared is 48.53 points higher. With a Standard Deviation of 14.42, IWF is slightly less volatile than VNQ. The Alpha and Beta of IWF are 0.31 points lower and 0.27 points higher than VNQ’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 2014 was the strongest year for VNQ, returning 30.29% on an annual basis. The poorest year for VNQ in the last ten years was 2018, with a yield of -5.95%. Most years the Vanguard Real Estate Index Fund ETF Shares has given investors modest returns, such as in 2017, 2016, and 2011, when gains were 4.95%, 8.53%, and 8.62% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 VNQ, the end total would have been $29,506. This equates to a $19,506 profit over 11 years and a compound annual growth rate (CAGR) of 11.05%.
IWF’s CAGR is 6.68 percentage points higher than that of VNQ and as a result, would have yielded $26,414 more on a $10,000 investment. Thus, IWF outperformed VNQ by 6.68% annually.
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