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IWM vs. VOE: What’s The Difference?

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

The expense ratio of IWM is 0.12 percentage points higher than VOE’s (0.19% vs. 0.07%). IWM also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, IWM has provided higher returns than VOE over the past ten years.

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

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Summary

IWMVOE
NameiShares Russell 2000 ETFVanguard Mid-Cap Value Index Fund ETF Shares
CategorySmall BlendMid-Cap Value
IssueriSharesVanguard
AUM66.48B26.78B
Avg. Return13.52%12.52%
Div. Yield0.86%1.87%
Expense Ratio0.19%0.07%

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 Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) is a Mid-Cap Value fund that is issued by Vanguard. It currently has 26.78B total assets under management and has yielded an average annual return of 12.52% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.07%.

IWM’s dividend yield is 1.01% lower than that of VOE (0.86% vs. 1.87%). Also, IWM yielded on average 1.00% more per year over the past decade (13.52% vs. 12.52%). The expense ratio of IWM is 0.12 percentage points higher than VOE’s (0.19% vs. 0.07%).

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Fund Composition

Industry Exposure

IWM vs. VOE - Industry Exposure

IWMVOE
Technology14.21%9.85%
Industrials14.78%9.4%
Energy3.74%5.69%
Communication Services3.79%5.27%
Utilities2.44%10.93%
Healthcare20.3%7.04%
Consumer Defensive3.65%4.85%
Real Estate8.59%11.48%
Financial Services13.76%18.26%
Consumer Cyclical10.99%11.8%
Basic Materials3.74%5.44%

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 Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has the most exposure to the Financial Services sector at 18.26%. This is followed by Consumer Cyclical and Real Estate at 11.8% and 11.48% respectively. Communication Services (5.27%), Basic Materials (5.44%), and Energy (5.69%) only make up 16.40% of the fund’s total assets.

VOE’s mid-section with moderate exposure is comprised of Healthcare, Industrials, Technology, Utilities, and Real Estate stocks at 7.04%, 9.4%, 9.85%, 10.93%, and 11.48%.

IWM is 13.26% more exposed to the Healthcare sector than VOE (20.3% vs 7.04%). IWM’s exposure to Industrials and Technology stocks is 5.38% higher and 4.36% higher respectively (14.78% vs. 9.4% and 14.21% vs. 9.85%). In total, Consumer Defensive, Basic Materials, and Energy also make up 4.85% less of the fund’s holdings compared to VOE (11.13% vs. 15.98%).

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%.

VOE - Holdings

VOE HoldingsWeight
Carrier Global Corp Ordinary Shares1.28%
International Flavors & Fragrances Inc1.13%
Motorola Solutions Inc1.12%
Discover Financial Services1.09%
Welltower Inc1.05%
Corteva Inc0.99%
Valero Energy Corp0.97%
Corning Inc0.95%
Willis Towers Watson PLC0.9%
D.R. Horton Inc0.89%

VOE’s Top Holdings are Carrier Global Corp Ordinary Shares, International Flavors & Fragrances Inc, Motorola Solutions Inc, Discover Financial Services, and Welltower Inc at 1.28%, 1.13%, 1.12%, 1.09%, and 1.05%.

Corteva Inc (0.99%), Valero Energy Corp (0.97%), and Corning Inc (0.95%) have a slightly smaller but still significant weight. Willis Towers Watson PLC and D.R. Horton Inc are also represented in the VOE’s holdings at 0.9% and 0.89%.

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Risk Analysis

IWMVOE
Mean Return1.121.05
R-squared77.7388.76
Std. Deviation18.8715.98
Alpha-5.12-3.77
Beta1.231.11
Sharpe Ratio0.680.75
Treynor Ratio9.5610.19

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

The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a Mean Return of 1.05 with a Sharpe Ratio of 0.75 and a Beta of 1.11. Its Standard Deviation is 15.98 while VOE’s Treynor Ratio is 10.19. Furthermore, the fund has a Alpha of -3.77 and a R-squared of 88.76.

IWM’s Mean Return is 0.07 points higher than that of VOE and its R-squared is 11.03 points lower. With a Standard Deviation of 18.87, IWM is slightly more volatile than VOE. The Alpha and Beta of IWM are 1.35 points lower and 0.12 points higher than VOE’s Alpha and Beta.

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Performance

Annual Returns

IWM vs. VOE - Annual Returns

YearIWMVOE
202019.89%2.5%
201925.42%27.98%
2018-11.02%-12.41%
201714.66%17.05%
201621.36%15.26%
2015-4.33%-1.8%
20144.94%13.98%
201338.85%37.65%
201216.39%16.04%
2011-4.19%-0.32%
201026.76%21.83%

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 VOE, returning 37.65% on an annual basis. The poorest year for VOE in the last ten years was 2018, with a yield of -12.41%. Most years the Vanguard Mid-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 13.98%, 15.26%, and 16.04% respectively.

Portfolio Growth

IWM vs. VOE - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IWM$10,000$36,68613.52%
VOE$10,000$33,65512.52%

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 VOE, the end total would have been $33,655. This equates to a $23,655 profit over 11 years and a compound annual growth rate (CAGR) of 12.52%.

IWM’s CAGR is 1.00 percentage points higher than that of VOE and as a result, would have yielded $3,031 more on a $10,000 investment. Thus, IWM outperformed VOE by 1.00% annually.


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