Skip to content

IWM vs. DGRO: What’s The Difference?

The iShares Russell 2000 ETF (IWM) and the iShares Core Dividend Growth ETF (DGRO) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and DGRO is a iShares Large Value fund. So, what’s the difference between IWM and DGRO? And which fund is better?

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

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

Introduction To Mutual Funds
Introduction To Mutual Funds
TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

IWMDGRO
NameiShares Russell 2000 ETFiShares Core Dividend Growth ETF
CategorySmall BlendLarge Value
IssueriSharesiShares
AUM66.48B20B
Avg. Return13.52%12.46%
Div. Yield0.86%2.04%
Expense Ratio0.19%0.08%

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 Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.

IWM’s dividend yield is 1.18% lower than that of DGRO (0.86% vs. 2.04%). Also, IWM yielded on average 1.06% more per year over the past decade (13.52% vs. 12.46%). The expense ratio of IWM is 0.11 percentage points higher than DGRO’s (0.19% vs. 0.08%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

IWM vs. DGRO - Industry Exposure

IWMDGRO
Technology14.21%18.98%
Industrials14.78%12.52%
Energy3.74%0.11%
Communication Services3.79%4.53%
Utilities2.44%7.34%
Healthcare20.3%17.55%
Consumer Defensive3.65%10.24%
Real Estate8.59%0.0%
Financial Services13.76%18.47%
Consumer Cyclical10.99%7.42%
Basic Materials3.74%2.83%

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 Core Dividend Growth ETF (DGRO) has the most exposure to the Technology sector at 18.98%. This is followed by Financial Services and Healthcare at 18.47% and 17.55% respectively. Energy (0.11%), Basic Materials (2.83%), and Communication Services (4.53%) only make up 7.47% of the fund’s total assets.

DGRO’s mid-section with moderate exposure is comprised of Utilities, Consumer Cyclical, Consumer Defensive, Industrials, and Healthcare stocks at 7.34%, 7.42%, 10.24%, 12.52%, and 17.55%.

IWM is 2.75% more exposed to the Healthcare sector than DGRO (20.3% vs 17.55%). IWM’s exposure to Industrials and Technology stocks is 2.26% higher and 4.77% lower respectively (14.78% vs. 12.52% and 14.21% vs. 18.98%). In total, Consumer Defensive, Basic Materials, and Energy also make up 2.05% less of the fund’s holdings compared to DGRO (11.13% vs. 13.18%).

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%.

DGRO - Holdings

DGRO HoldingsWeight
Microsoft Corp3.29%
Apple Inc3.26%
Pfizer Inc2.89%
Johnson & Johnson2.87%
Procter & Gamble Co2.79%
Verizon Communications Inc2.68%
JPMorgan Chase & Co2.57%
The Home Depot Inc2.35%
Merck & Co Inc2.11%
Cisco Systems Inc1.98%

DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.

Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

IWMDGRO
Mean Return1.120
R-squared77.730
Std. Deviation18.870
Alpha-5.120
Beta1.230
Sharpe Ratio0.680
Treynor Ratio9.560

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

The iShares Core Dividend Growth ETF (DGRO) has a Treynor Ratio of 0 with a R-squared of 0 and a Standard Deviation of 0. Its Mean Return is 0 while DGRO’s Beta is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Alpha of 0.

IWM’s Mean Return is 1.12 points higher than that of DGRO and its R-squared is 77.73 points higher. With a Standard Deviation of 18.87, IWM is slightly more volatile than DGRO. The Alpha and Beta of IWM are 5.12 points lower and 1.23 points higher than DGRO’s Alpha and Beta.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

IWM vs. DGRO - Annual Returns

YearIWMDGRO
202019.89%9.47%
201925.42%30.02%
2018-11.02%-2.24%
201714.66%22.84%
201621.36%15.27%
2015-4.33%-0.62%
20144.94%0.0%
201338.85%0.0%
201216.39%0.0%
2011-4.19%0.0%
201026.76%0.0%

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 DGRO, returning 30.02% on an annual basis. The poorest year for DGRO in the last ten years was 2018, with a yield of -2.24%. Most years the iShares Core Dividend Growth ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

IWM vs. DGRO - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IWM$10,000$17,81113.52%
DGRO$10,000$19,58012.46%

A $10,000 investment in IWM would have resulted in a final balance of $17,811. This is a profit of $7,811 over 6 years and amounts to a compound annual growth rate (CAGR) of 13.52%.

With a $10,000 investment in DGRO, the end total would have been $19,580. This equates to a $9,580 profit over 6 years and a compound annual growth rate (CAGR) of 12.46%.

IWM’s CAGR is 1.06 percentage points higher than that of DGRO and as a result, would have yielded $1,769 less on a $10,000 investment. Thus, IWM outperformed DGRO by 1.06% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply

Your email address will not be published.