IWM vs. IWD: What’s The Difference?

The iShares Russell 2000 ETF (IWM) and the iShares Russell 1000 Value ETF (IWD) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and IWD is a iShares Large Value fund. So, what’s the difference between IWM and IWD? And which fund is better?

IWM and IWD have the same expense ratio: 0.19%. IWM also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, IWM has provided higher returns than IWD over the past ten years.

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

Summary

IWM IWD
Name iShares Russell 2000 ETF iShares Russell 1000 Value ETF
Category Small Blend Large Value
Issuer iShares iShares
AUM 66.48B 54.1B
Avg. Return 13.52% 11.40%
Div. Yield 0.86% 1.57%
Expense Ratio 0.19% 0.19%

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 Russell 1000 Value ETF (IWD) is a Large Value fund that is issued by iShares. It currently has 54.1B total assets under management and has yielded an average annual return of 11.40% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.19%.

IWM’s dividend yield is 0.71% lower than that of IWD (0.86% vs. 1.57%). Also, IWM yielded on average 2.12% more per year over the past decade (13.52% vs. 11.40%). IWM and IWD have the same expense ratio: 0.19%.

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Fund Composition

Industry Exposure

IWM vs. IWD - Industry Exposure

IWM IWD
Technology 14.21% 10.28%
Industrials 14.78% 11.77%
Energy 3.74% 4.76%
Communication Services 3.79% 8.67%
Utilities 2.44% 4.88%
Healthcare 20.3% 17.78%
Consumer Defensive 3.65% 7.76%
Real Estate 8.59% 4.94%
Financial Services 13.76% 20.43%
Consumer Cyclical 10.99% 5.62%
Basic Materials 3.74% 3.1%

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 Russell 1000 Value ETF (IWD) has the most exposure to the Financial Services sector at 20.43%. This is followed by Healthcare and Industrials at 17.78% and 11.77% respectively. Energy (4.76%), Utilities (4.88%), and Real Estate (4.94%) only make up 14.58% of the fund’s total assets.

IWD’s mid-section with moderate exposure is comprised of Consumer Cyclical, Consumer Defensive, Communication Services, Technology, and Industrials stocks at 5.62%, 7.76%, 8.67%, 10.28%, and 11.77%.

IWM is 2.52% more exposed to the Healthcare sector than IWD (20.3% vs 17.78%). IWM’s exposure to Industrials and Technology stocks is 3.01% higher and 3.93% higher respectively (14.78% vs. 11.77% and 14.21% vs. 10.28%). In total, Consumer Defensive, Basic Materials, and Energy also make up 4.49% less of the fund’s holdings compared to IWD (11.13% vs. 15.62%).

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%.

IWD - Holdings

IWD Holdings Weight
Berkshire Hathaway Inc Class B 2.58%
JPMorgan Chase & Co 2.25%
Johnson & Johnson 2.24%
UnitedHealth Group Inc 1.78%
Procter & Gamble Co 1.71%
The Walt Disney Co 1.5%
Bank of America Corp 1.43%
Comcast Corp Class A 1.33%
Exxon Mobil Corp 1.2%
Pfizer Inc 1.18%

IWD’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.58%, 2.25%, 2.24%, 1.78%, and 1.71%.

The Walt Disney Co (1.5%), Bank of America Corp (1.43%), and Comcast Corp Class A (1.33%) have a slightly smaller but still significant weight. Exxon Mobil Corp and Pfizer Inc are also represented in the IWD’s holdings at 1.2% and 1.18%.

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Risk Analysis

IWM IWD
Mean Return 1.12 1.03
R-squared 77.73 92.38
Std. Deviation 18.87 14.35
Alpha -5.12 -3.23
Beta 1.23 1.02
Sharpe Ratio 0.68 0.81
Treynor Ratio 9.56 11.06

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

The iShares Russell 1000 Value ETF (IWD) has a Treynor Ratio of 11.06 with a Standard Deviation of 14.35 and a Beta of 1.02. Its Sharpe Ratio is 0.81 while IWD’s Mean Return is 1.03. Furthermore, the fund has a Alpha of -3.23 and a R-squared of 92.38.

IWM’s Mean Return is 0.09 points higher than that of IWD and its R-squared is 14.65 points lower. With a Standard Deviation of 18.87, IWM is slightly more volatile than IWD. The Alpha and Beta of IWM are 1.89 points lower and 0.21 points higher than IWD’s Alpha and Beta.

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Performance

Annual Returns

IWM vs. IWD - Annual Returns

Year IWM IWD
2020 19.89% 2.67%
2019 25.42% 26.34%
2018 -11.02% -8.4%
2017 14.66% 13.47%
2016 21.36% 17.09%
2015 -4.33% -3.95%
2014 4.94% 13.21%
2013 38.85% 32.18%
2012 16.39% 17.28%
2011 -4.19% 0.21%
2010 26.76% 15.3%

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 IWD, returning 32.18% on an annual basis. The poorest year for IWD in the last ten years was 2018, with a yield of -8.4%. Most years the iShares Russell 1000 Value ETF has given investors modest returns, such as in 2014, 2017, and 2010, when gains were 13.21%, 13.47%, and 15.3% respectively.

Portfolio Growth

IWM vs. IWD - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWM $10,000 $36,686 13.52%
IWD $10,000 $30,746 11.40%

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 IWD, the end total would have been $30,746. This equates to a $20,746 profit over 11 years and a compound annual growth rate (CAGR) of 11.40%.

IWM’s CAGR is 2.12 percentage points higher than that of IWD and as a result, would have yielded $5,940 more on a $10,000 investment. Thus, IWM outperformed IWD by 2.12% annually.


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