The iShares Russell 2000 ETF (IWM) and the Vanguard Extended Market Index Fund ETF Shares (VXF) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and VXF is a Vanguard Mid-Cap Growth fund. So, what’s the difference between IWM and VXF? And which fund is better?
The expense ratio of IWM is 0.13 percentage points higher than VXF’s (0.19% vs. 0.06%). IWM also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, IWM has provided lower returns than VXF over the past ten years.
In this article, we’ll compare IWM vs. VXF. We’ll look at holdings and portfolio growth, as well as at their risk metrics and performance. Moreover, I’ll also discuss IWM’s and VXF’s fund composition, industry exposure, and annual returns and examine how these affect their overall returns.
|Name||iShares Russell 2000 ETF||Vanguard Extended Market Index Fund ETF Shares|
|Category||Small Blend||Mid-Cap Growth|
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 Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.
IWM’s dividend yield is 0.33% lower than that of VXF (0.86% vs. 1.19%). Also, IWM yielded on average 1.95% less per year over the past decade (13.52% vs. 15.47%). The expense ratio of IWM is 0.13 percentage points higher than VXF’s (0.19% vs. 0.06%).
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 Extended Market Index Fund ETF Shares (VXF) has the most exposure to the Technology sector at 23.61%. This is followed by Healthcare and Financial Services at 15.25% and 12.56% respectively. Energy (2.46%), Consumer Defensive (3.09%), and Basic Materials (3.26%) only make up 8.81% of the fund’s total assets.
VXF’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Industrials, Consumer Cyclical, and Financial Services stocks at 7.29%, 8.16%, 11.31%, 11.35%, and 12.56%.
IWM is 5.05% more exposed to the Healthcare sector than VXF (20.3% vs 15.25%). IWM’s exposure to Industrials and Technology stocks is 3.47% higher and 9.40% lower respectively (14.78% vs. 11.31% and 14.21% vs. 23.61%). In total, Consumer Defensive, Basic Materials, and Energy also make up 2.32% more of the fund’s holdings compared to VXF (11.13% vs. 8.81%).
|AMC Entertainment Holdings Inc Class A||0.52%|
|Intellia Therapeutics Inc||0.33%|
|BlackRock Cash Funds Treasury SL Agency||0.29%|
|Tenet Healthcare Corp||0.26%|
|Lattice Semiconductor Corp||0.26%|
|Tetra Tech 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%.
|Square Inc A||1.2%|
|Zoom Video Communications Inc||1.04%|
|Uber Technologies Inc||0.93%|
|Blackstone Group Inc||0.83%|
|Snap Inc Class A||0.8%|
|Twilio Inc A||0.73%|
|CrowdStrike Holdings Inc Class A||0.63%|
|Marvell Technology Inc||0.6%|
VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.
Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.
The iShares Russell 2000 ETF (IWM) has a Mean Return of 1.12 with a R-squared of 77.73 and a Beta of 1.23. Its Alpha is -5.12 while IWM’s Treynor Ratio is 9.56. Furthermore, the fund has a Standard Deviation of 18.87 and a Sharpe Ratio of 0.68.
The Vanguard Extended Market Index Fund ETF Shares (VXF) has a R-squared of 85.73 with a Beta of 1.23 and a Mean Return of 1.24. Its Alpha is -3.26 while VXF’s Standard Deviation is 18.04. Furthermore, the fund has a Sharpe Ratio of 0.79 and a Treynor Ratio of 10.92.
IWM’s Mean Return is 0.12 points lower than that of VXF and its R-squared is 8.00 points lower. With a Standard Deviation of 18.87, IWM is slightly more volatile than VXF. The Alpha and Beta of IWM are 1.86 points lower and 0.00 points lower than VXF’s Alpha and Beta.
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 VXF, returning 38.37% on an annual basis. The poorest year for VXF in the last ten years was 2018, with a yield of -9.37%. Most years the Vanguard Extended Market Index Fund ETF Shares has given investors modest returns, such as in 2016, 2017, and 2012, when gains were 16.16%, 18.1%, and 18.48% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 VXF, the end total would have been $44,130. This equates to a $34,130 profit over 11 years and a compound annual growth rate (CAGR) of 15.47%.
IWM’s CAGR is 1.95 percentage points lower than that of VXF and as a result, would have yielded $7,444 less on a $10,000 investment. Thus, IWM performed worse than VXF by 1.95% annually.
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