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IWM vs. EFV: What’s The Difference?

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

The expense ratio of IWM is 0.20 percentage points lower than EFV’s (0.19% vs. 0.39%). IWM also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, IWM has provided higher returns than EFV over the past ten years.

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

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Summary

IWMEFV
NameiShares Russell 2000 ETFiShares MSCI EAFE Value ETF
CategorySmall BlendForeign Large Value
IssueriSharesiShares
AUM66.48B14.37B
Avg. Return13.52%3.99%
Div. Yield0.86%2.94%
Expense Ratio0.19%0.39%

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 EAFE Value ETF (EFV) is a Foreign Large Value fund that is issued by iShares. It currently has 14.37B total assets under management and has yielded an average annual return of 3.99% over the past 10 years. The fund has a dividend yield of 2.94% with an expense ratio of 0.39%.

IWM’s dividend yield is 2.08% lower than that of EFV (0.86% vs. 2.94%). Also, IWM yielded on average 9.53% more per year over the past decade (13.52% vs. 3.99%). The expense ratio of IWM is 0.20 percentage points lower than EFV’s (0.19% vs. 0.39%).

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Fund Composition

Industry Exposure

IWM vs. EFV - Industry Exposure

IWMEFV
Technology14.21%2.98%
Industrials14.78%11.6%
Energy3.74%6.6%
Communication Services3.79%6.46%
Utilities2.44%6.14%
Healthcare20.3%9.19%
Consumer Defensive3.65%6.82%
Real Estate8.59%5.06%
Financial Services13.76%26.55%
Consumer Cyclical10.99%9.0%
Basic Materials3.74%9.59%

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 EAFE Value ETF (EFV) has the most exposure to the Financial Services sector at 26.55%. This is followed by Industrials and Basic Materials at 11.6% and 9.59% respectively. Real Estate (5.06%), Utilities (6.14%), and Communication Services (6.46%) only make up 17.66% of the fund’s total assets.

EFV’s mid-section with moderate exposure is comprised of Energy, Consumer Defensive, Consumer Cyclical, Healthcare, and Basic Materials stocks at 6.6%, 6.82%, 9.0%, 9.19%, and 9.59%.

IWM is 11.11% more exposed to the Healthcare sector than EFV (20.3% vs 9.19%). IWM’s exposure to Industrials and Technology stocks is 3.18% higher and 11.23% higher respectively (14.78% vs. 11.6% and 14.21% vs. 2.98%). In total, Consumer Defensive, Basic Materials, and Energy also make up 11.88% less of the fund’s holdings compared to EFV (11.13% vs. 23.01%).

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%.

EFV - Holdings

EFV HoldingsWeight
Novartis AG2.41%
Toyota Motor Corp2.21%
Commonwealth Bank of Australia1.59%
Siemens AG1.45%
Sanofi SA1.42%
HSBC Holdings PLC1.4%
TotalEnergies SE1.35%
Allianz SE1.23%
GlaxoSmithKline PLC1.18%
Rio Tinto PLC1.1%

EFV’s Top Holdings are Novartis AG, Toyota Motor Corp, Commonwealth Bank of Australia, Siemens AG, and Sanofi SA at 2.41%, 2.21%, 1.59%, 1.45%, and 1.42%.

HSBC Holdings PLC (1.4%), TotalEnergies SE (1.35%), and Allianz SE (1.23%) have a slightly smaller but still significant weight. GlaxoSmithKline PLC and Rio Tinto PLC are also represented in the EFV’s holdings at 1.18% and 1.1%.

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Risk Analysis

IWMEFV
Mean Return1.120.42
R-squared77.7392.15
Std. Deviation18.8716.53
Alpha-5.12-1.77
Beta1.231.05
Sharpe Ratio0.680.26
Treynor Ratio9.562.92

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

The iShares MSCI EAFE Value ETF (EFV) has a Treynor Ratio of 2.92 with a R-squared of 92.15 and a Mean Return of 0.42. Its Alpha is -1.77 while EFV’s Beta is 1.05. Furthermore, the fund has a Standard Deviation of 16.53 and a Sharpe Ratio of 0.26.

IWM’s Mean Return is 0.70 points higher than that of EFV and its R-squared is 14.42 points lower. With a Standard Deviation of 18.87, IWM is slightly more volatile than EFV. The Alpha and Beta of IWM are 3.35 points lower and 0.18 points higher than EFV’s Alpha and Beta.

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Performance

Annual Returns

IWM vs. EFV - Annual Returns

YearIWMEFV
202019.89%-2.78%
201925.42%15.97%
2018-11.02%-14.88%
201714.66%21.22%
201621.36%4.87%
2015-4.33%-5.89%
20144.94%-5.65%
201338.85%22.61%
201216.39%17.52%
2011-4.19%-12.24%
201026.76%3.18%

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 EFV, returning 22.61% on an annual basis. The poorest year for EFV in the last ten years was 2018, with a yield of -14.88%. Most years the iShares MSCI EAFE Value ETF has given investors modest returns, such as in 2020, 2010, and 2016, when gains were -2.78%, 3.18%, and 4.87% respectively.

Portfolio Growth

IWM vs. EFV - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IWM$10,000$36,68613.52%
EFV$10,000$14,1343.99%

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 EFV, the end total would have been $14,134. This equates to a $4,134 profit over 11 years and a compound annual growth rate (CAGR) of 3.99%.

IWM’s CAGR is 9.53 percentage points higher than that of EFV and as a result, would have yielded $22,552 more on a $10,000 investment. Thus, IWM outperformed EFV by 9.53% annually.


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