The iShares Russell 2000 ETF (IWM) and the iShares Russell Mid-Cap ETF (IWR) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and IWR is a iShares Mid-Cap Blend fund. So, what’s the difference between IWM and IWR? And which fund is better?
IWM and IWR 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 lower returns than IWR over the past ten years.
In this article, we’ll compare IWM vs. IWR. We’ll look at holdings and performance, as well as at their industry exposure and fund composition. Moreover, I’ll also discuss IWM’s and IWR’s annual returns, portfolio growth, and risk metrics and examine how these affect their overall returns.
Summary
| IWM | IWR | |
| Name | iShares Russell 2000 ETF | iShares Russell Mid-Cap ETF |
| Category | Small Blend | Mid-Cap Blend |
| Issuer | iShares | iShares |
| AUM | 66.48B | 29.84B |
| Avg. Return | 13.52% | 14.15% |
| Div. Yield | 0.86% | 0.99% |
| 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 Mid-Cap ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% with an expense ratio of 0.19%.
IWM’s dividend yield is 0.13% lower than that of IWR (0.86% vs. 0.99%). Also, IWM yielded on average 0.63% less per year over the past decade (13.52% vs. 14.15%). IWM and IWR have the same expense ratio: 0.19%.
Fund Composition
Industry Exposure
| IWM | IWR | |
| Technology | 14.21% | 19.67% |
| Industrials | 14.78% | 14.54% |
| Energy | 3.74% | 3.48% |
| Communication Services | 3.79% | 4.64% |
| Utilities | 2.44% | 4.46% |
| Healthcare | 20.3% | 11.76% |
| Consumer Defensive | 3.65% | 3.82% |
| Real Estate | 8.59% | 8.31% |
| Financial Services | 13.76% | 11.64% |
| Consumer Cyclical | 10.99% | 13.59% |
| Basic Materials | 3.74% | 4.1% |
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 Mid-Cap ETF (IWR) has the most exposure to the Technology sector at 19.67%. This is followed by Industrials and Consumer Cyclical at 14.54% and 13.59% respectively. Consumer Defensive (3.82%), Basic Materials (4.1%), and Utilities (4.46%) only make up 12.38% of the fund’s total assets.
IWR’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Healthcare, and Consumer Cyclical stocks at 4.64%, 8.31%, 11.64%, 11.76%, and 13.59%.
IWM is 8.54% more exposed to the Healthcare sector than IWR (20.3% vs 11.76%). IWM’s exposure to Industrials and Technology stocks is 0.24% higher and 5.46% lower respectively (14.78% vs. 14.54% and 14.21% vs. 19.67%). In total, Consumer Defensive, Basic Materials, and Energy also make up 0.27% less of the fund’s holdings compared to IWR (11.13% vs. 11.40%).
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%.
| IWR Holdings | Weight |
| IDEXX Laboratories Inc | 0.51% |
| DocuSign Inc | 0.51% |
| Twitter Inc | 0.48% |
| Chipotle Mexican Grill Inc | 0.47% |
| Roku Inc Class A | 0.44% |
| Marvell Technology Inc | 0.44% |
| DexCom Inc | 0.44% |
| Trane Technologies PLC | 0.43% |
| MSCI Inc | 0.43% |
| Carrier Global Corp Ordinary Shares | 0.43% |
IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.
Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.
Risk Analysis
| IWM | IWR | |
| Mean Return | 1.12 | 1.17 |
| R-squared | 77.73 | 91.52 |
| Std. Deviation | 18.87 | 15.66 |
| Alpha | -5.12 | -2.8 |
| Beta | 1.23 | 1.11 |
| Sharpe Ratio | 0.68 | 0.86 |
| Treynor Ratio | 9.56 | 11.72 |
The iShares Russell 2000 ETF (IWM) has a Treynor Ratio of 9.56 with a Sharpe Ratio of 0.68 and a R-squared of 77.73. Its Standard Deviation is 18.87 while IWM’s Beta is 1.23. Furthermore, the fund has a Mean Return of 1.12 and a Alpha of -5.12.
The iShares Russell Mid-Cap ETF (IWR) has a Mean Return of 1.17 with a R-squared of 91.52 and a Alpha of -2.8. Its Standard Deviation is 15.66 while IWR’s Beta is 1.11. Furthermore, the fund has a Treynor Ratio of 11.72 and a Sharpe Ratio of 0.86.
IWM’s Mean Return is 0.05 points lower than that of IWR and its R-squared is 13.79 points lower. With a Standard Deviation of 18.87, IWM is slightly more volatile than IWR. The Alpha and Beta of IWM are 2.32 points lower and 0.12 points higher than IWR’s Alpha and Beta.
Performance
Annual Returns
| Year | IWM | IWR |
| 2020 | 19.89% | 16.91% |
| 2019 | 25.42% | 30.31% |
| 2018 | -11.02% | -9.13% |
| 2017 | 14.66% | 18.32% |
| 2016 | 21.36% | 13.58% |
| 2015 | -4.33% | -2.57% |
| 2014 | 4.94% | 13.03% |
| 2013 | 38.85% | 34.5% |
| 2012 | 16.39% | 17.13% |
| 2011 | -4.19% | -1.67% |
| 2010 | 26.76% | 25.25% |
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 IWR, returning 34.5% on an annual basis. The poorest year for IWR in the last ten years was 2018, with a yield of -9.13%. Most years the iShares Russell Mid-Cap ETF has given investors modest returns, such as in 2016, 2020, and 2012, when gains were 13.58%, 16.91%, and 17.13% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWM | $10,000 | $36,686 | 13.52% |
| IWR | $10,000 | $39,751 | 14.15% |
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 IWR, the end total would have been $39,751. This equates to a $29,751 profit over 11 years and a compound annual growth rate (CAGR) of 14.15%.
IWM’s CAGR is 0.63 percentage points lower than that of IWR and as a result, would have yielded $3,065 less on a $10,000 investment. Thus, IWM performed worse than IWR by 0.63% annually.
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