The iShares Russell 2000 ETF (IWM) and the Vanguard Large-Cap Index Fund ETF Shares (VV) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and VV is a Vanguard Large Blend fund. So, what’s the difference between IWM and VV? And which fund is better?
The expense ratio of IWM is 0.15 percentage points higher than VV’s (0.19% vs. 0.04%). IWM also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, IWM has provided lower returns than VV over the past ten years.
In this article, we’ll compare IWM vs. VV. We’ll look at holdings and portfolio growth, as well as at their performance and fund composition. Moreover, I’ll also discuss IWM’s and VV’s risk metrics, annual returns, and industry exposure and examine how these affect their overall returns.
Summary
| IWM | VV | |
| Name | iShares Russell 2000 ETF | Vanguard Large-Cap Index Fund ETF Shares |
| Category | Small Blend | Large Blend |
| Issuer | iShares | Vanguard |
| AUM | 66.48B | 37.65B |
| Avg. Return | 13.52% | 14.75% |
| Div. Yield | 0.86% | 1.26% |
| Expense Ratio | 0.19% | 0.04% |
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 Large-Cap Index Fund ETF Shares (VV) is a Large Blend fund that is issued by Vanguard. It currently has 37.65B total assets under management and has yielded an average annual return of 14.75% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.04%.
IWM’s dividend yield is 0.40% lower than that of VV (0.86% vs. 1.26%). Also, IWM yielded on average 1.23% less per year over the past decade (13.52% vs. 14.75%). The expense ratio of IWM is 0.15 percentage points higher than VV’s (0.19% vs. 0.04%).
Fund Composition
Industry Exposure
| IWM | VV | |
| Technology | 14.21% | 25.38% |
| Industrials | 14.78% | 8.39% |
| Energy | 3.74% | 2.62% |
| Communication Services | 3.79% | 11.68% |
| Utilities | 2.44% | 2.35% |
| Healthcare | 20.3% | 13.22% |
| Consumer Defensive | 3.65% | 6.06% |
| Real Estate | 8.59% | 2.7% |
| Financial Services | 13.76% | 13.82% |
| Consumer Cyclical | 10.99% | 11.65% |
| Basic Materials | 3.74% | 2.13% |
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 Large-Cap Index Fund ETF Shares (VV) has the most exposure to the Technology sector at 25.38%. This is followed by Financial Services and Healthcare at 13.82% and 13.22% respectively. Utilities (2.35%), Energy (2.62%), and Real Estate (2.7%) only make up 7.67% of the fund’s total assets.
VV’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Consumer Cyclical, Communication Services, and Healthcare stocks at 6.06%, 8.39%, 11.65%, 11.68%, and 13.22%.
IWM is 7.08% more exposed to the Healthcare sector than VV (20.3% vs 13.22%). IWM’s exposure to Industrials and Technology stocks is 6.39% higher and 11.17% lower respectively (14.78% vs. 8.39% and 14.21% vs. 25.38%). In total, Consumer Defensive, Basic Materials, and Energy also make up 0.32% more of the fund’s holdings compared to VV (11.13% vs. 10.81%).
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%.
| VV Holdings | Weight |
| Apple Inc | 5.7% |
| Microsoft Corp | 5.35% |
| Amazon.com Inc | 3.87% |
| Facebook Inc Class A | 2.19% |
| Alphabet Inc Class A | 1.93% |
| Alphabet Inc Class C | 1.81% |
| Tesla Inc | 1.37% |
| Berkshire Hathaway Inc Class B | 1.3% |
| NVIDIA Corp | 1.24% |
| JPMorgan Chase & Co | 1.24% |
VV’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.7%, 5.35%, 3.87%, 2.19%, and 1.93%.
Alphabet Inc Class C (1.81%), Tesla Inc (1.37%), and Berkshire Hathaway Inc Class B (1.3%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VV’s holdings at 1.24% and 1.24%.
Risk Analysis
| IWM | VV | |
| Mean Return | 1.12 | 1.24 |
| R-squared | 77.73 | 99.86 |
| Std. Deviation | 18.87 | 13.75 |
| Alpha | -5.12 | -0.08 |
| Beta | 1.23 | 1.01 |
| Sharpe Ratio | 0.68 | 1.04 |
| Treynor Ratio | 9.56 | 14.14 |
The iShares Russell 2000 ETF (IWM) has a Treynor Ratio of 9.56 with a R-squared of 77.73 and a Alpha of -5.12. Its Beta is 1.23 while IWM’s Mean Return is 1.12. Furthermore, the fund has a Standard Deviation of 18.87 and a Sharpe Ratio of 0.68.
The Vanguard Large-Cap Index Fund ETF Shares (VV) has a Treynor Ratio of 14.14 with a Beta of 1.01 and a R-squared of 99.86. Its Sharpe Ratio is 1.04 while VV’s Alpha is -0.08. Furthermore, the fund has a Mean Return of 1.24 and a Standard Deviation of 13.75.
IWM’s Mean Return is 0.12 points lower than that of VV and its R-squared is 22.13 points lower. With a Standard Deviation of 18.87, IWM is slightly more volatile than VV. The Alpha and Beta of IWM are 5.04 points lower and 0.22 points higher than VV’s Alpha and Beta.
Performance
Annual Returns
| Year | IWM | VV |
| 2020 | 19.89% | 20.99% |
| 2019 | 25.42% | 31.39% |
| 2018 | -11.02% | -4.44% |
| 2017 | 14.66% | 22.03% |
| 2016 | 21.36% | 11.65% |
| 2015 | -4.33% | 1.07% |
| 2014 | 4.94% | 13.39% |
| 2013 | 38.85% | 32.65% |
| 2012 | 16.39% | 16.09% |
| 2011 | -4.19% | 1.58% |
| 2010 | 26.76% | 15.81% |
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 VV, returning 32.65% on an annual basis. The poorest year for VV in the last ten years was 2018, with a yield of -4.44%. Most years the Vanguard Large-Cap Index Fund ETF Shares has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.39%, 15.81%, and 16.09% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWM | $10,000 | $36,686 | 13.52% |
| VV | $10,000 | $42,970 | 14.75% |
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 VV, the end total would have been $42,970. This equates to a $32,970 profit over 11 years and a compound annual growth rate (CAGR) of 14.75%.
IWM’s CAGR is 1.23 percentage points lower than that of VV and as a result, would have yielded $6,284 less on a $10,000 investment. Thus, IWM performed worse than VV by 1.23% annually.
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