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.
|Name||iShares Russell 2000 ETF||iShares Russell Mid-Cap Growth ETF|
|Category||Small Blend||Mid-Cap Growth|
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%).
FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).
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%).
|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%.
|IDEXX Laboratories Inc||1.3%|
|Roku Inc Class A||1.29%|
|Match Group Inc||1.06%|
|Chipotle Mexican Grill Inc||1.06%|
|Veeva Systems Inc Class A||1.04%|
|Palantir Technologies Inc Ordinary Shares – Class A||1.04%|
|Lululemon Athletica Inc||1.01%|
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%.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
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.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
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.
|Fund||Initial Balance||Final Balance||CAGR|
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.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.