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IWM vs. VT: What’s The Difference?

The iShares Russell 2000 ETF (IWM) and the Vanguard Total World Stock Index Fund ETF Shares (VT) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and VT is a Vanguard N/A fund. So, what’s the difference between IWM and VT? And which fund is better?

The expense ratio of IWM is 0.11 percentage points higher than VT’s (0.19% vs. 0.08%). IWM also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, IWM has provided higher returns than VT over the past ten years.

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

Introduction To Mutual Funds
Introduction To Mutual Funds
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Summary

IWMVT
NameiShares Russell 2000 ETFVanguard Total World Stock Index Fund ETF Shares
CategorySmall BlendN/A
IssueriSharesVanguard
AUM66.48B30.44B
Avg. Return13.52%10.42%
Div. Yield0.86%1.65%
Expense Ratio0.19%0.08%

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 Total World Stock Index Fund ETF Shares (VT) is a N/A fund that is issued by Vanguard. It currently has 30.44B total assets under management and has yielded an average annual return of 10.42% over the past 10 years. The fund has a dividend yield of 1.65% with an expense ratio of 0.08%.

IWM’s dividend yield is 0.79% lower than that of VT (0.86% vs. 1.65%). Also, IWM yielded on average 3.11% more per year over the past decade (13.52% vs. 10.42%). The expense ratio of IWM is 0.11 percentage points higher than VT’s (0.19% vs. 0.08%).

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Fund Composition

Industry Exposure

IWM vs. VT - Industry Exposure

IWMVT
Technology14.21%19.63%
Industrials14.78%10.7%
Energy3.74%3.48%
Communication Services3.79%9.02%
Utilities2.44%2.6%
Healthcare20.3%11.58%
Consumer Defensive3.65%6.71%
Real Estate8.59%3.64%
Financial Services13.76%15.36%
Consumer Cyclical10.99%12.32%
Basic Materials3.74%4.97%

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 Total World Stock Index Fund ETF Shares (VT) has the most exposure to the Technology sector at 19.63%. This is followed by Financial Services and Consumer Cyclical at 15.36% and 12.32% respectively. Energy (3.48%), Real Estate (3.64%), and Basic Materials (4.97%) only make up 12.09% of the fund’s total assets.

VT’s mid-section with moderate exposure is comprised of Consumer Defensive, Communication Services, Industrials, Healthcare, and Consumer Cyclical stocks at 6.71%, 9.02%, 10.7%, 11.58%, and 12.32%.

IWM is 8.72% more exposed to the Healthcare sector than VT (20.3% vs 11.58%). IWM’s exposure to Industrials and Technology stocks is 4.08% higher and 5.42% lower respectively (14.78% vs. 10.7% and 14.21% vs. 19.63%). In total, Consumer Defensive, Basic Materials, and Energy also make up 4.03% less of the fund’s holdings compared to VT (11.13% vs. 15.16%).

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%.

VT - Holdings

VT HoldingsWeight
Apple Inc2.85%
Microsoft Corp2.71%
Amazon.com Inc1.98%
Facebook Inc Class A1.1%
Alphabet Inc Class A0.97%
Alphabet Inc Class C0.95%
Tesla Inc0.7%
NVIDIA Corp0.64%
JPMorgan Chase & Co0.62%
Tencent Holdings Ltd0.6%

VT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 2.85%, 2.71%, 1.98%, 1.1%, and 0.97%.

Alphabet Inc Class C (0.95%), Tesla Inc (0.7%), and NVIDIA Corp (0.64%) have a slightly smaller but still significant weight. JPMorgan Chase & Co and Tencent Holdings Ltd are also represented in the VT’s holdings at 0.62% and 0.6%.

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Risk Analysis

IWMVT
Mean Return1.120.9
R-squared77.7399.35
Std. Deviation18.8714.19
Alpha-5.120.2
Beta1.231.01
Sharpe Ratio0.680.71
Treynor Ratio9.569.5

The iShares Russell 2000 ETF (IWM) has a Mean Return of 1.12 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 Beta of 1.23 and a Alpha of -5.12.

The Vanguard Total World Stock Index Fund ETF Shares (VT) has a Beta of 1.01 with a Treynor Ratio of 9.5 and a Standard Deviation of 14.19. Its R-squared is 99.35 while VT’s Alpha is 0.2. Furthermore, the fund has a Sharpe Ratio of 0.71 and a Mean Return of 0.9.

IWM’s Mean Return is 0.22 points higher than that of VT and its R-squared is 21.62 points lower. With a Standard Deviation of 18.87, IWM is slightly more volatile than VT. The Alpha and Beta of IWM are 5.32 points lower and 0.22 points higher than VT’s Alpha and Beta.

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Performance

Annual Returns

IWM vs. VT - Annual Returns

YearIWMVT
202019.89%16.74%
201925.42%26.8%
2018-11.02%-9.67%
201714.66%24.19%
201621.36%8.77%
2015-4.33%-1.88%
20144.94%3.97%
201338.85%22.98%
201216.39%17.33%
2011-4.19%-7.71%
201026.76%13.05%

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 2019 was the strongest year for VT, returning 26.8% on an annual basis. The poorest year for VT in the last ten years was 2018, with a yield of -9.67%. Most years the Vanguard Total World Stock Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 8.77%, 13.05%, and 16.74% respectively.

Portfolio Growth

IWM vs. VT - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IWM$10,000$36,68613.52%
VT$10,000$27,73910.42%

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 VT, the end total would have been $27,739. This equates to a $17,739 profit over 11 years and a compound annual growth rate (CAGR) of 10.42%.

IWM’s CAGR is 3.11 percentage points higher than that of VT and as a result, would have yielded $8,947 more on a $10,000 investment. Thus, IWM outperformed VT by 3.11% annually.


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