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IWM vs. ACWI: What’s The Difference?

The iShares Russell 2000 ETF (IWM) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and ACWI is a iShares N/A fund. So, what’s the difference between IWM and ACWI? And which fund is better?

The expense ratio of IWM is 0.13 percentage points lower than ACWI’s (0.19% vs. 0.32%). IWM also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, IWM has provided higher returns than ACWI over the past ten years.

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

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Summary

IWMACWI
NameiShares Russell 2000 ETFiShares MSCI ACWI ETF
CategorySmall BlendN/A
IssueriSharesiShares
AUM66.48B16.85B
Avg. Return13.52%10.21%
Div. Yield0.86%1.39%
Expense Ratio0.19%0.32%

The iShares Russell 2000 ETF (IWM) is a Small Blend fund that is issued by iShares. It currently has 66.48B total assets under management and has yielded an average annual return of 13.52% over the past 10 years. The fund has a dividend yield of 0.86% with an expense ratio of 0.19%.

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

IWM’s dividend yield is 0.53% lower than that of ACWI (0.86% vs. 1.39%). Also, IWM yielded on average 3.31% more per year over the past decade (13.52% vs. 10.21%). The expense ratio of IWM is 0.13 percentage points lower than ACWI’s (0.19% vs. 0.32%).

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Fund Composition

Industry Exposure

IWM vs. ACWI - Industry Exposure

IWMACWI
Technology14.21%20.41%
Industrials14.78%9.65%
Energy3.74%3.48%
Communication Services3.79%9.87%
Utilities2.44%2.61%
Healthcare20.3%11.74%
Consumer Defensive3.65%7.15%
Real Estate8.59%2.75%
Financial Services13.76%15.58%
Consumer Cyclical10.99%12.01%
Basic Materials3.74%4.73%

The iShares Russell 2000 ETF (IWM) has the most exposure to the Healthcare sector at 20.3%. This is followed by Industrials and Technology at 14.78% and 14.21% respectively. Consumer Defensive (3.65%), Basic Materials (3.74%), and Energy (3.74%) only make up 11.13% of the fund’s total assets.

IWM’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.79%, 8.59%, 10.99%, 13.76%, and 14.21%.

The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.

ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.

IWM is 8.56% more exposed to the Healthcare sector than ACWI (20.3% vs 11.74%). IWM’s exposure to Industrials and Technology stocks is 5.13% higher and 6.20% lower respectively (14.78% vs. 9.65% and 14.21% vs. 20.41%). In total, Consumer Defensive, Basic Materials, and Energy also make up 4.23% less of the fund’s holdings compared to ACWI (11.13% vs. 15.36%).

Holdings

IWM - Holdings

IWM HoldingsWeight
AMC Entertainment Holdings Inc Class A0.52%
Intellia Therapeutics Inc0.33%
Crocs Inc0.3%
BlackRock Cash Funds Treasury SL Agency0.29%
Tenet Healthcare Corp0.26%
Lattice Semiconductor Corp0.26%
Tetra Tech Inc0.25%
II-VI Inc0.25%
EastGroup Properties Inc0.24%
Arrowhead Pharmaceuticals Inc0.24%

IWM’s Top Holdings are AMC Entertainment Holdings Inc Class A, Intellia Therapeutics Inc, Crocs Inc, BlackRock Cash Funds Treasury SL Agency, and Tenet Healthcare Corp at 0.52%, 0.33%, 0.3%, 0.29%, and 0.26%.

Lattice Semiconductor Corp (0.26%), Tetra Tech Inc (0.25%), and II-VI Inc (0.25%) have a slightly smaller but still significant weight. EastGroup Properties Inc and Arrowhead Pharmaceuticals Inc are also represented in the IWM’s holdings at 0.24% and 0.24%.

ACWI - Holdings

ACWI HoldingsWeight
Apple Inc3.44%
Microsoft Corp2.91%
Amazon.com Inc2.21%
Facebook Inc A1.25%
Alphabet Inc Class C1.12%
Alphabet Inc A1.09%
Taiwan Semiconductor Manufacturing Co Ltd0.79%
Tesla Inc0.78%
NVIDIA Corp0.74%
JPMorgan Chase & Co0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

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Risk Analysis

IWMACWI
Mean Return1.120.89
R-squared77.7399.96
Std. Deviation18.8714.05
Alpha-5.120.15
Beta1.231
Sharpe Ratio0.680.71
Treynor Ratio9.569.45

The iShares Russell 2000 ETF (IWM) has a Treynor Ratio of 9.56 with a R-squared of 77.73 and a Sharpe Ratio of 0.68. Its Beta is 1.23 while IWM’s Mean Return is 1.12. Furthermore, the fund has a Alpha of -5.12 and a Standard Deviation of 18.87.

The iShares MSCI ACWI ETF (ACWI) has a Beta of 1 with a Sharpe Ratio of 0.71 and a Treynor Ratio of 9.45. Its Standard Deviation is 14.05 while ACWI’s R-squared is 99.96. Furthermore, the fund has a Alpha of 0.15 and a Mean Return of 0.89.

IWM’s Mean Return is 0.23 points higher than that of ACWI and its R-squared is 22.23 points lower. With a Standard Deviation of 18.87, IWM is slightly more volatile than ACWI. The Alpha and Beta of IWM are 5.27 points lower and 0.23 points higher than ACWI’s Alpha and Beta.

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Performance

Annual Returns

IWM vs. ACWI - Annual Returns

YearIWMACWI
202019.89%16.38%
201925.42%26.7%
2018-11.02%-9.15%
201714.66%24.35%
201621.36%8.22%
2015-4.33%-2.39%
20144.94%4.64%
201338.85%22.91%
201216.39%15.99%
2011-4.19%-7.6%
201026.76%12.31%

IWM had its best year in 2013 with an annual return of 38.85%. IWM’s worst year over the past decade yielded -11.02% and occurred in 2018. In most years the iShares Russell 2000 ETF provided moderate returns such as in 2017, 2012, and 2020 where annual returns amounted to 14.66%, 16.39%, and 19.89% respectively.

The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.

Portfolio Growth

IWM vs. ACWI - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IWM$10,000$36,68613.52%
ACWI$10,000$27,24110.21%

A $10,000 investment in IWM would have resulted in a final balance of $36,686. This is a profit of $26,686 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.52%.

With a $10,000 investment in ACWI, the end total would have been $27,241. This equates to a $17,241 profit over 11 years and a compound annual growth rate (CAGR) of 10.21%.

IWM’s CAGR is 3.31 percentage points higher than that of ACWI and as a result, would have yielded $9,445 more on a $10,000 investment. Thus, IWM outperformed ACWI by 3.31% annually.


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