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.
|Name||iShares Russell 2000 ETF||iShares Core Dividend Growth ETF|
|Category||Small Blend||Large Value|
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%).
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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%).
|AMC Entertainment Holdings Inc Class A||0.52%|
|Intellia Therapeutics Inc||0.33%|
|BlackRock Cash Funds Treasury SL Agency||0.29%|
|Tenet Healthcare Corp||0.26%|
|Lattice Semiconductor Corp||0.26%|
|Tetra Tech Inc||0.25%|
|EastGroup Properties Inc||0.24%|
|Arrowhead Pharmaceuticals Inc||0.24%|
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%.
|Johnson & Johnson||2.87%|
|Procter & Gamble Co||2.79%|
|Verizon Communications Inc||2.68%|
|JPMorgan Chase & Co||2.57%|
|The Home Depot Inc||2.35%|
|Merck & Co Inc||2.11%|
|Cisco Systems Inc||1.98%|
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%.
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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.
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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.
|Fund||Initial Balance||Final Balance||CAGR|
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.
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