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IWM vs. IWS: What’s The Difference?

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

The expense ratio of IWM is 0.04 percentage points lower than IWS’s (0.19% vs. 0.23%). IWM also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, IWM has provided higher returns than IWS over the past ten years.

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

Introduction To Mutual Funds
Introduction To Mutual Funds
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Summary

IWMIWS
NameiShares Russell 2000 ETFiShares Russell Mid-Cap Value ETF
CategorySmall BlendMid-Cap Value
IssueriSharesiShares
AUM66.48B14.24B
Avg. Return13.52%12.35%
Div. Yield0.86%1.34%
Expense Ratio0.19%0.23%

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 Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

IWM’s dividend yield is 0.48% lower than that of IWS (0.86% vs. 1.34%). Also, IWM yielded on average 1.17% more per year over the past decade (13.52% vs. 12.35%). The expense ratio of IWM is 0.04 percentage points lower than IWS’s (0.19% vs. 0.23%).

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Fund Composition

Industry Exposure

IWM vs. IWS - Industry Exposure

IWMIWS
Technology14.21%11.39%
Industrials14.78%14.6%
Energy3.74%4.71%
Communication Services3.79%4.08%
Utilities2.44%6.97%
Healthcare20.3%8.56%
Consumer Defensive3.65%4.76%
Real Estate8.59%11.71%
Financial Services13.76%15.75%
Consumer Cyclical10.99%12.07%
Basic Materials3.74%5.4%

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 Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.

IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.

IWM is 11.74% more exposed to the Healthcare sector than IWS (20.3% vs 8.56%). IWM’s exposure to Industrials and Technology stocks is 0.18% higher and 2.82% higher respectively (14.78% vs. 14.6% and 14.21% vs. 11.39%). In total, Consumer Defensive, Basic Materials, and Energy also make up 3.74% less of the fund’s holdings compared to IWS (11.13% vs. 14.87%).

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%.

IWS - Holdings

IWS HoldingsWeight
Twitter Inc0.69%
Marvell Technology Inc0.69%
IHS Markit Ltd0.62%
Prudential Financial Inc0.56%
Otis Worldwide Corp Ordinary Shares0.54%
International Flavors & Fragrances Inc0.53%
Xcel Energy Inc0.52%
Motorola Solutions Inc0.52%
Aptiv PLC0.52%
Aflac Inc0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

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Risk Analysis

IWMIWS
Mean Return1.121.06
R-squared77.7387.04
Std. Deviation18.8716.03
Alpha-5.12-4.11
Beta1.231.1
Sharpe Ratio0.680.75
Treynor Ratio9.5610.3

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

The iShares Russell Mid-Cap Value ETF (IWS) has a Standard Deviation of 16.03 with a Alpha of -4.11 and a Mean Return of 1.06. Its R-squared is 87.04 while IWS’s Beta is 1.1. Furthermore, the fund has a Treynor Ratio of 10.3 and a Sharpe Ratio of 0.75.

IWM’s Mean Return is 0.06 points higher than that of IWS and its R-squared is 9.31 points lower. With a Standard Deviation of 18.87, IWM is slightly more volatile than IWS. The Alpha and Beta of IWM are 1.01 points lower and 0.13 points higher than IWS’s Alpha and Beta.

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Performance

Annual Returns

IWM vs. IWS - Annual Returns

YearIWMIWS
202019.89%4.76%
201925.42%26.78%
2018-11.02%-12.36%
201714.66%13.1%
201621.36%19.69%
2015-4.33%-4.93%
20144.94%14.49%
201338.85%33.11%
201216.39%18.27%
2011-4.19%-1.55%
201026.76%24.46%

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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

IWM vs. IWS - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IWM$10,000$36,68613.52%
IWS$10,000$33,08312.35%

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 IWS, the end total would have been $33,083. This equates to a $23,083 profit over 11 years and a compound annual growth rate (CAGR) of 12.35%.

IWM’s CAGR is 1.17 percentage points higher than that of IWS and as a result, would have yielded $3,603 more on a $10,000 investment. Thus, IWM outperformed IWS by 1.17% annually.


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