The iShares Russell 2000 ETF (IWM) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between IWM and VTIP? And which fund is better?
The expense ratio of IWM is 0.14 percentage points higher than VTIP’s (0.19% vs. 0.05%). IWM also has a high exposure to the healthcare sector while VTIP is mostly comprised of AAA bonds. Overall, IWM has provided higher returns than VTIP over the past ten years.
In this article, we’ll compare IWM vs. VTIP. We’ll look at annual returns and portfolio growth, as well as at their performance and risk metrics. Moreover, I’ll also discuss IWM’s and VTIP’s fund composition, holdings, and industry exposure and examine how these affect their overall returns.
Summary
| IWM | VTIP | |
| Name | iShares Russell 2000 ETF | Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares |
| Category | Small Blend | Inflation-Protected Bond |
| Issuer | iShares | Vanguard |
| AUM | 66.48B | 50.67B |
| Avg. Return | 13.52% | 1.79% |
| Div. Yield | 0.86% | 1.35% |
| Expense Ratio | 0.19% | 0.05% |
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 Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.
IWM’s dividend yield is 0.49% lower than that of VTIP (0.86% vs. 1.35%). Also, IWM yielded on average 11.73% more per year over the past decade (13.52% vs. 1.79%). The expense ratio of IWM is 0.14 percentage points higher than VTIP’s (0.19% vs. 0.05%).
Fund Composition
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%.
| VTIP Bond Sectors | Weight |
| AAA | 99.87% |
| Others | 0.13% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
Risk Analysis
| IWM | VTIP | |
| Mean Return | 1.12 | 0 |
| R-squared | 77.73 | 0 |
| Std. Deviation | 18.87 | 0 |
| Alpha | -5.12 | 0 |
| Beta | 1.23 | 0 |
| Sharpe Ratio | 0.68 | 0 |
| Treynor Ratio | 9.56 | 0 |
The iShares Russell 2000 ETF (IWM) has a R-squared of 77.73 with a Treynor Ratio of 9.56 and a Standard Deviation of 18.87. Its Sharpe Ratio is 0.68 while IWM’s Alpha is -5.12. Furthermore, the fund has a Mean Return of 1.12 and a Beta of 1.23.
The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Treynor Ratio of 0 with a Standard Deviation of 0 and a Mean Return of 0. Its Sharpe Ratio is 0 while VTIP’s Alpha is 0. Furthermore, the fund has a Beta of 0 and a R-squared of 0.
IWM’s Mean Return is 1.12 points higher than that of VTIP and its R-squared is 77.73 points higher. With a Standard Deviation of 18.87, IWM is slightly more volatile than VTIP. The Alpha and Beta of IWM are 5.12 points lower and 1.23 points higher than VTIP’s Alpha and Beta.
Performance
Annual Returns
| Year | IWM | VTIP |
| 2020 | 19.89% | 4.97% |
| 2019 | 25.42% | 4.83% |
| 2018 | -11.02% | 0.54% |
| 2017 | 14.66% | 0.82% |
| 2016 | 21.36% | 2.71% |
| 2015 | -4.33% | -0.15% |
| 2014 | 4.94% | -1.17% |
| 2013 | 38.85% | -1.55% |
| 2012 | 16.39% | 0.0% |
| 2011 | -4.19% | 0.0% |
| 2010 | 26.76% | 0.0% |
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 2020 was the strongest year for VTIP, returning 4.97% on an annual basis. The poorest year for VTIP in the last ten years was 2013, with a yield of -1.55%. Most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 0.54% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWM | $10,000 | $18,691 | 13.52% |
| VTIP | $10,000 | $11,305 | 1.79% |
A $10,000 investment in IWM would have resulted in a final balance of $18,691. This is a profit of $8,691 over 7 years and amounts to a compound annual growth rate (CAGR) of 13.52%.
With a $10,000 investment in VTIP, the end total would have been $11,305. This equates to a $1,305 profit over 7 years and a compound annual growth rate (CAGR) of 1.79%.
IWM’s CAGR is 11.73 percentage points higher than that of VTIP and as a result, would have yielded $7,386 more on a $10,000 investment. Thus, IWM outperformed VTIP by 11.73% annually.
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