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IWF vs. VNQ: What’s The Difference?

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.

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Summary

IWFVNQ
NameiShares Russell 1000 Growth ETFVanguard Real Estate Index Fund ETF Shares
CategoryLarge GrowthReal Estate
IssueriSharesVanguard
AUM72.16B77.34B
Avg. Return17.72%11.05%
Div. Yield0.52%2.34%
Expense Ratio0.19%0.12%

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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Fund Composition

Industry Exposure

IWF vs. VNQ - Industry Exposure

IWFVNQ
Technology39.29%0.0%
Industrials6.19%0.0%
Energy0.28%0.0%
Communication Services12.82%0.0%
Utilities0.03%0.0%
Healthcare9.23%0.0%
Consumer Defensive4.31%0.0%
Real Estate1.85%100.0%
Financial Services7.36%0.0%
Consumer Cyclical17.62%0.0%
Basic Materials1.01%0.0%

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%).

Holdings

IWF - Holdings

IWF HoldingsWeight
Apple Inc10.51%
Microsoft Corp9.85%
Amazon.com Inc6.63%
Facebook Inc Class A3.91%
Alphabet Inc Class A3.2%
Alphabet Inc Class C3.03%
Tesla Inc2.45%
NVIDIA Corp2.14%
Visa Inc Class A1.91%
The Home Depot Inc1.62%

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%.

VNQ - Holdings

VNQ HoldingsWeight
Vanguard Real Estate II Index11.62%
American Tower Corp7.24%
Prologis Inc5.33%
Crown Castle International Corp5.01%
Equinix Inc4.3%
Public Storage2.85%
Simon Property Group Inc2.52%
Digital Realty Trust Inc2.49%
SBA Communications Corp2.1%
Welltower Inc2.09%

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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Risk Analysis

IWFVNQ
Mean Return1.480.89
R-squared92.9344.4
Std. Deviation14.4216.13
Alpha2.162.47
Beta1.030.76
Sharpe Ratio1.190.62
Treynor Ratio17.111.9

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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Performance

Annual Returns

IWF vs. VNQ - Annual Returns

YearIWFVNQ
202038.21%-4.72%
201936.08%28.91%
2018-1.68%-5.95%
201729.96%4.95%
20166.92%8.53%
20155.48%2.37%
201412.84%30.29%
201333.19%2.42%
201215.03%17.67%
20112.47%8.62%
201016.47%28.44%

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.

Portfolio Growth

IWF vs. VNQ - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IWF$10,000$55,92017.72%
VNQ$10,000$29,50611.05%

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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