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IWM vs. IWP: What’s The Difference?

The iShares Russell 2000 ETF (IWM) and the iShares Russell Mid-Cap Growth ETF (IWP) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and IWP is a iShares Mid-Cap Growth fund. So, what’s the difference between IWM and IWP? And which fund is better?

The expense ratio of IWM is 0.05 percentage points lower than IWP’s (0.19% vs. 0.24%). IWM also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, IWM has provided lower returns than IWP over the past ten years.

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

Introduction To Mutual Funds
Introduction To Mutual Funds
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Summary

IWMIWP
NameiShares Russell 2000 ETFiShares Russell Mid-Cap Growth ETF
CategorySmall BlendMid-Cap Growth
IssueriSharesiShares
AUM66.48B15.7B
Avg. Return13.52%16.75%
Div. Yield0.86%0.26%
Expense Ratio0.19%0.24%

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 Mid-Cap Growth ETF (IWP) is a Mid-Cap Growth fund that is issued by iShares. It currently has 15.7B total assets under management and has yielded an average annual return of 16.75% over the past 10 years. The fund has a dividend yield of 0.26% with an expense ratio of 0.24%.

IWM’s dividend yield is 0.60% higher than that of IWP (0.86% vs. 0.26%). Also, IWM yielded on average 3.23% less per year over the past decade (13.52% vs. 16.75%). The expense ratio of IWM is 0.05 percentage points lower than IWP’s (0.19% vs. 0.24%).

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Fund Composition

Industry Exposure

IWM vs. IWP - Industry Exposure

IWMIWP
Technology14.21%33.88%
Industrials14.78%14.09%
Energy3.74%1.51%
Communication Services3.79%6.32%
Utilities2.44%0.16%
Healthcare20.3%16.79%
Consumer Defensive3.65%2.32%
Real Estate8.59%2.46%
Financial Services13.76%4.52%
Consumer Cyclical10.99%16.09%
Basic Materials3.74%1.86%

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 Mid-Cap Growth ETF (IWP) has the most exposure to the Technology sector at 33.88%. This is followed by Healthcare and Consumer Cyclical at 16.79% and 16.09% respectively. Energy (1.51%), Basic Materials (1.86%), and Consumer Defensive (2.32%) only make up 5.69% of the fund’s total assets.

IWP’s mid-section with moderate exposure is comprised of Real Estate, Financial Services, Communication Services, Industrials, and Consumer Cyclical stocks at 2.46%, 4.52%, 6.32%, 14.09%, and 16.09%.

IWM is 3.51% more exposed to the Healthcare sector than IWP (20.3% vs 16.79%). IWM’s exposure to Industrials and Technology stocks is 0.69% higher and 19.67% lower respectively (14.78% vs. 14.09% and 14.21% vs. 33.88%). In total, Consumer Defensive, Basic Materials, and Energy also make up 5.44% more of the fund’s holdings compared to IWP (11.13% vs. 5.69%).

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%.

IWP - Holdings

IWP HoldingsWeight
IDEXX Laboratories Inc1.3%
DocuSign Inc1.3%
Roku Inc Class A1.29%
Match Group Inc1.06%
Chipotle Mexican Grill Inc1.06%
Pinterest Inc1.05%
Veeva Systems Inc Class A1.04%
Palantir Technologies Inc Ordinary Shares – Class A1.04%
Lululemon Athletica Inc1.01%
DexCom Inc1.0%

IWP’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Roku Inc Class A, Match Group Inc, and Chipotle Mexican Grill Inc at 1.3%, 1.3%, 1.29%, 1.06%, and 1.06%.

Pinterest Inc (1.05%), Veeva Systems Inc Class A (1.04%), and Palantir Technologies Inc Ordinary Shares – Class A (1.04%) have a slightly smaller but still significant weight. Lululemon Athletica Inc and DexCom Inc are also represented in the IWP’s holdings at 1.01% and 1.0%.

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Risk Analysis

IWMIWP
Mean Return1.121.27
R-squared77.7387.01
Std. Deviation18.8716.05
Alpha-5.12-1.03
Beta1.231.1
Sharpe Ratio0.680.91
Treynor Ratio9.5612.98

The iShares Russell 2000 ETF (IWM) has a Treynor Ratio of 9.56 with a Standard Deviation of 18.87 and a R-squared of 77.73. 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 Alpha of -5.12.

The iShares Russell Mid-Cap Growth ETF (IWP) has a Alpha of -1.03 with a Standard Deviation of 16.05 and a Beta of 1.1. Its Treynor Ratio is 12.98 while IWP’s Mean Return is 1.27. Furthermore, the fund has a R-squared of 87.01 and a Sharpe Ratio of 0.91.

IWM’s Mean Return is 0.15 points lower than that of IWP and its R-squared is 9.28 points lower. With a Standard Deviation of 18.87, IWM is slightly more volatile than IWP. The Alpha and Beta of IWM are 4.09 points lower and 0.13 points higher than IWP’s Alpha and Beta.

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Performance

Annual Returns

IWM vs. IWP - Annual Returns

YearIWMIWP
202019.89%35.29%
201925.42%35.14%
2018-11.02%-4.95%
201714.66%24.98%
201621.36%7.15%
2015-4.33%-0.39%
20144.94%11.68%
201338.85%35.44%
201216.39%15.62%
2011-4.19%-1.82%
201026.76%26.1%

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 IWP, returning 35.44% on an annual basis. The poorest year for IWP in the last ten years was 2018, with a yield of -4.95%. Most years the iShares Russell Mid-Cap Growth ETF has given investors modest returns, such as in 2014, 2012, and 2017, when gains were 11.68%, 15.62%, and 24.98% respectively.

Portfolio Growth

IWM vs. IWP - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IWM$10,000$36,68613.52%
IWP$10,000$50,19116.75%

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 IWP, the end total would have been $50,191. This equates to a $40,191 profit over 11 years and a compound annual growth rate (CAGR) of 16.75%.

IWM’s CAGR is 3.23 percentage points lower than that of IWP and as a result, would have yielded $13,505 less on a $10,000 investment. Thus, IWM performed worse than IWP by 3.23% annually.


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