IWF vs. VYM: What’s The Difference?

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

The expense ratio of IWF is 0.13 percentage points higher than VYM’s (0.19% vs. 0.06%). IWF also has a higher exposure to the technology sector and a higher standard deviation. Overall, IWF has provided higher returns than VYM over the past ten years.

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

Summary

IWF VYM
Name iShares Russell 1000 Growth ETF Vanguard High Dividend Yield Index Fund ETF Shares
Category Large Growth Large Value
Issuer iShares Vanguard
AUM 72.16B 48.5B
Avg. Return 17.72% 12.20%
Div. Yield 0.52% 2.79%
Expense Ratio 0.19% 0.06%

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 High Dividend Yield Index Fund ETF Shares (VYM) is a Large Value fund that is issued by Vanguard. It currently has 48.5B total assets under management and has yielded an average annual return of 12.20% over the past 10 years. The fund has a dividend yield of 2.79% with an expense ratio of 0.06%.

IWF’s dividend yield is 2.27% lower than that of VYM (0.52% vs. 2.79%). Also, IWF yielded on average 5.53% more per year over the past decade (17.72% vs. 12.20%). The expense ratio of IWF is 0.13 percentage points higher than VYM’s (0.19% vs. 0.06%).

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Fund Composition

Industry Exposure

IWF vs. VYM - Industry Exposure

IWF VYM
Technology 39.29% 9.77%
Industrials 6.19% 10.14%
Energy 0.28% 7.12%
Communication Services 12.82% 5.91%
Utilities 0.03% 7.27%
Healthcare 9.23% 13.61%
Consumer Defensive 4.31% 14.13%
Real Estate 1.85% 0.02%
Financial Services 7.36% 22.05%
Consumer Cyclical 17.62% 5.57%
Basic Materials 1.01% 4.41%

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 High Dividend Yield Index Fund ETF Shares (VYM) has the most exposure to the Financial Services sector at 22.05%. This is followed by Consumer Defensive and Healthcare at 14.13% and 13.61% respectively. Basic Materials (4.41%), Consumer Cyclical (5.57%), and Communication Services (5.91%) only make up 15.89% of the fund’s total assets.

VYM’s mid-section with moderate exposure is comprised of Energy, Utilities, Technology, Industrials, and Healthcare stocks at 7.12%, 7.27%, 9.77%, 10.14%, and 13.61%.

IWF is 29.52% more exposed to the Technology sector than VYM (39.29% vs 9.77%). IWF’s exposure to Consumer Cyclical and Communication Services stocks is 12.05% higher and 6.91% higher respectively (17.62% vs. 5.57% and 12.82% vs. 5.91%). In total, Energy, Basic Materials, and Real Estate also make up 8.41% less of the fund’s holdings compared to VYM (3.14% vs. 11.55%).

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%.

VYM - Holdings

VYM Holdings Weight
JPMorgan Chase & Co 3.53%
Johnson & Johnson 3.28%
The Home Depot Inc 2.59%
Procter & Gamble Co 2.48%
Bank of America Corp 2.35%
Exxon Mobil Corp 2.02%
Comcast Corp Class A 1.96%
Verizon Communications Inc 1.75%
Intel Corp 1.71%
Cisco Systems Inc 1.69%

VYM’s Top Holdings are JPMorgan Chase & Co, Johnson & Johnson, The Home Depot Inc, Procter & Gamble Co, and Bank of America Corp at 3.53%, 3.28%, 2.59%, 2.48%, and 2.35%.

Exxon Mobil Corp (2.02%), Comcast Corp Class A (1.96%), and Verizon Communications Inc (1.75%) have a slightly smaller but still significant weight. Intel Corp and Cisco Systems Inc are also represented in the VYM’s holdings at 1.71% and 1.69%.

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Risk Analysis

IWF VYM
Mean Return 1.48 1.04
R-squared 92.93 88.88
Std. Deviation 14.42 12.69
Alpha 2.16 -0.7
Beta 1.03 0.88
Sharpe Ratio 1.19 0.93
Treynor Ratio 17.1 13.24

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

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Sharpe Ratio of 0.93 with a Treynor Ratio of 13.24 and a Standard Deviation of 12.69. Its Mean Return is 1.04 while VYM’s Beta is 0.88. Furthermore, the fund has a Alpha of -0.7 and a R-squared of 88.88.

IWF’s Mean Return is 0.44 points higher than that of VYM and its R-squared is 4.05 points higher. With a Standard Deviation of 14.42, IWF is slightly more volatile than VYM. The Alpha and Beta of IWF are 2.86 points higher and 0.15 points higher than VYM’s Alpha and Beta.

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Performance

Annual Returns

IWF vs. VYM - Annual Returns

Year IWF VYM
2020 38.21% 1.14%
2019 36.08% 24.2%
2018 -1.68% -5.87%
2017 29.96% 16.42%
2016 6.92% 16.87%
2015 5.48% 0.33%
2014 12.84% 13.47%
2013 33.19% 30.26%
2012 15.03% 12.68%
2011 2.47% 10.5%
2010 16.47% 14.17%

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 VYM, returning 30.26% on an annual basis. The poorest year for VYM in the last ten years was 2018, with a yield of -5.87%. Most years the Vanguard High Dividend Yield Index Fund ETF Shares has given investors modest returns, such as in 2012, 2014, and 2010, when gains were 12.68%, 13.47%, and 14.17% respectively.

Portfolio Growth

IWF vs. VYM - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWF $10,000 $55,920 17.72%
VYM $10,000 $33,914 12.20%

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 VYM, the end total would have been $33,914. This equates to a $23,914 profit over 11 years and a compound annual growth rate (CAGR) of 12.20%.

IWF’s CAGR is 5.53 percentage points higher than that of VYM and as a result, would have yielded $22,006 more on a $10,000 investment. Thus, IWF outperformed VYM by 5.53% annually.


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