IWM vs. DIA: What’s The Difference?

The iShares Russell 2000 ETF (IWM) and the SPDR Dow Jones Industrial Average ETF Trust (DIA) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and DIA is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between IWM and DIA? And which fund is better?

The expense ratio of IWM is 0.03 percentage points higher than DIA’s (0.19% vs. 0.16%). IWM also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, IWM has provided higher returns than DIA over the past ten years.

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

Summary

IWM DIA
Name iShares Russell 2000 ETF SPDR Dow Jones Industrial Average ETF Trust
Category Small Blend Large Value
Issuer iShares SPDR State Street Global Advisors
AUM 66.48B 30.46B
Avg. Return 13.52% 13.35%
Div. Yield 0.86% 1.61%
Expense Ratio 0.19% 0.16%

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 SPDR Dow Jones Industrial Average ETF Trust (DIA) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 30.46B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.61% with an expense ratio of 0.16%.

IWM’s dividend yield is 0.75% lower than that of DIA (0.86% vs. 1.61%). Also, IWM yielded on average 0.17% more per year over the past decade (13.52% vs. 13.35%). The expense ratio of IWM is 0.03 percentage points higher than DIA’s (0.19% vs. 0.16%).

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Fund Composition

Industry Exposure

IWM vs. DIA - Industry Exposure

IWM DIA
Technology 14.21% 17.32%
Industrials 14.78% 16.7%
Energy 3.74% 2.0%
Communication Services 3.79% 4.42%
Utilities 2.44% 0.0%
Healthcare 20.3% 17.92%
Consumer Defensive 3.65% 6.3%
Real Estate 8.59% 0.0%
Financial Services 13.76% 20.68%
Consumer Cyclical 10.99% 13.44%
Basic Materials 3.74% 1.21%

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 SPDR Dow Jones Industrial Average ETF Trust (DIA) has the most exposure to the Financial Services sector at 20.68%. This is followed by Healthcare and Technology at 17.92% and 17.32% respectively. Utilities (0.0%), Basic Materials (1.21%), and Energy (2.0%) only make up 3.21% of the fund’s total assets.

DIA’s mid-section with moderate exposure is comprised of Communication Services, Consumer Defensive, Consumer Cyclical, Industrials, and Technology stocks at 4.42%, 6.3%, 13.44%, 16.7%, and 17.32%.

IWM is 2.38% more exposed to the Healthcare sector than DIA (20.3% vs 17.92%). IWM’s exposure to Industrials and Technology stocks is 1.92% lower and 3.11% lower respectively (14.78% vs. 16.7% and 14.21% vs. 17.32%). In total, Consumer Defensive, Basic Materials, and Energy also make up 1.62% more of the fund’s holdings compared to DIA (11.13% vs. 9.51%).

Holdings

IWM - Holdings

IWM Holdings Weight
AMC Entertainment Holdings Inc Class A 0.52%
Intellia Therapeutics Inc 0.33%
Crocs Inc 0.3%
BlackRock Cash Funds Treasury SL Agency 0.29%
Tenet Healthcare Corp 0.26%
Lattice Semiconductor Corp 0.26%
Tetra Tech Inc 0.25%
II-VI 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%.

DIA - Holdings

DIA Holdings Weight
UnitedHealth Group Inc 7.63%
Goldman Sachs Group Inc 7.23%
The Home Depot Inc 6.07%
Microsoft Corp 5.16%
Salesforce.com Inc 4.65%
Amgen Inc 4.64%
Boeing Co 4.56%
Visa Inc Class A 4.45%
McDonald’s Corp 4.4%
Honeywell International Inc 4.18%

DIA’s Top Holdings are UnitedHealth Group Inc, Goldman Sachs Group Inc, The Home Depot Inc, Microsoft Corp, and Salesforce.com Inc at 7.63%, 7.23%, 6.07%, 5.16%, and 4.65%.

Amgen Inc (4.64%), Boeing Co (4.56%), and Visa Inc Class A (4.45%) have a slightly smaller but still significant weight. McDonald’s Corp and Honeywell International Inc are also represented in the DIA’s holdings at 4.4% and 4.18%.

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Risk Analysis

IWM DIA
Mean Return 1.12 1.13
R-squared 77.73 93.31
Std. Deviation 18.87 13.68
Alpha -5.12 -0.94
Beta 1.23 0.97
Sharpe Ratio 0.68 0.94
Treynor Ratio 9.56 13.07

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

The SPDR Dow Jones Industrial Average ETF Trust (DIA) has a Sharpe Ratio of 0.94 with a R-squared of 93.31 and a Treynor Ratio of 13.07. Its Mean Return is 1.13 while DIA’s Alpha is -0.94. Furthermore, the fund has a Beta of 0.97 and a Standard Deviation of 13.68.

IWM’s Mean Return is 0.01 points lower than that of DIA and its R-squared is 15.58 points lower. With a Standard Deviation of 18.87, IWM is slightly more volatile than DIA. The Alpha and Beta of IWM are 4.18 points lower and 0.26 points higher than DIA’s Alpha and Beta.

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Performance

Annual Returns

IWM vs. DIA - Annual Returns

Year IWM DIA
2020 19.89% 9.63%
2019 25.42% 25.09%
2018 -11.02% -3.6%
2017 14.66% 27.97%
2016 21.36% 16.28%
2015 -4.33% 0.1%
2014 4.94% 9.88%
2013 38.85% 29.41%
2012 16.39% 10.04%
2011 -4.19% 8.21%
2010 26.76% 13.87%

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 2013 was the strongest year for DIA, returning 29.41% on an annual basis. The poorest year for DIA in the last ten years was 2018, with a yield of -3.6%. Most years the SPDR Dow Jones Industrial Average ETF Trust has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 9.88%, 10.04%, and 13.87% respectively.

Portfolio Growth

IWM vs. DIA - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWM $10,000 $36,686 13.52%
DIA $10,000 $37,965 13.35%

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 DIA, the end total would have been $37,965. This equates to a $27,965 profit over 11 years and a compound annual growth rate (CAGR) of 13.35%.

IWM’s CAGR is 0.17 percentage points higher than that of DIA and as a result, would have yielded $1,279 less on a $10,000 investment. Thus, IWM outperformed DIA by 0.17% annually.


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