The iShares Russell 2000 ETF (IWM) and the Vanguard Total International Stock Index Fund ETF Shares (VXUS) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and VXUS is a Vanguard Foreign Large Blend fund. So, what’s the difference between IWM and VXUS? And which fund is better?
The expense ratio of IWM is 0.11 percentage points higher than VXUS’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 VXUS over the past ten years.
In this article, we’ll compare IWM vs. VXUS. We’ll look at annual returns and risk metrics, as well as at their performance and industry exposure. Moreover, I’ll also discuss IWM’s and VXUS’s holdings, fund composition, and portfolio growth and examine how these affect their overall returns.
Summary
| IWM | VXUS | |
| Name | iShares Russell 2000 ETF | Vanguard Total International Stock Index Fund ETF Shares |
| Category | Small Blend | Foreign Large Blend |
| Issuer | iShares | Vanguard |
| AUM | 66.48B | 404.73B |
| Avg. Return | 13.52% | 8.41% |
| Div. Yield | 0.86% | 2.44% |
| Expense Ratio | 0.19% | 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 International Stock Index Fund ETF Shares (VXUS) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 404.73B total assets under management and has yielded an average annual return of 8.41% over the past 10 years. The fund has a dividend yield of 2.44% with an expense ratio of 0.08%.
IWM’s dividend yield is 1.58% lower than that of VXUS (0.86% vs. 2.44%). Also, IWM yielded on average 5.12% more per year over the past decade (13.52% vs. 8.41%). The expense ratio of IWM is 0.11 percentage points higher than VXUS’s (0.19% vs. 0.08%).
Fund Composition
Industry Exposure
| IWM | VXUS | |
| Technology | 14.21% | 13.07% |
| Industrials | 14.78% | 12.94% |
| Energy | 3.74% | 4.55% |
| Communication Services | 3.79% | 7.06% |
| Utilities | 2.44% | 2.94% |
| Healthcare | 20.3% | 9.19% |
| Consumer Defensive | 3.65% | 7.83% |
| Real Estate | 8.59% | 3.79% |
| Financial Services | 13.76% | 17.64% |
| Consumer Cyclical | 10.99% | 12.64% |
| Basic Materials | 3.74% | 8.37% |
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 International Stock Index Fund ETF Shares (VXUS) has the most exposure to the Financial Services sector at 17.64%. This is followed by Technology and Industrials at 13.07% and 12.94% respectively. Real Estate (3.79%), Energy (4.55%), and Communication Services (7.06%) only make up 15.40% of the fund’s total assets.
VXUS’s mid-section with moderate exposure is comprised of Consumer Defensive, Basic Materials, Healthcare, Consumer Cyclical, and Industrials stocks at 7.83%, 8.37%, 9.19%, 12.64%, and 12.94%.
IWM is 11.11% more exposed to the Healthcare sector than VXUS (20.3% vs 9.19%). IWM’s exposure to Industrials and Technology stocks is 1.84% higher and 1.14% higher respectively (14.78% vs. 12.94% and 14.21% vs. 13.07%). In total, Consumer Defensive, Basic Materials, and Energy also make up 9.62% less of the fund’s holdings compared to VXUS (11.13% vs. 20.75%).
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%.
| VXUS Holdings | Weight |
| Taiwan Semiconductor Manufacturing Co Ltd | 1.62% |
| Tencent Holdings Ltd | 1.41% |
| Alibaba Group Holding Ltd Ordinary Shares | 1.26% |
| Nestle SA | 1.1% |
| Samsung Electronics Co Ltd | 1.05% |
| ASML Holding NV | 0.86% |
| Roche Holding AG | 0.81% |
| Toyota Motor Corp | 0.67% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.61% |
| Novartis AG | 0.6% |
VXUS’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, and Samsung Electronics Co Ltd at 1.62%, 1.41%, 1.26%, 1.1%, and 1.05%.
ASML Holding NV (0.86%), Roche Holding AG (0.81%), and Toyota Motor Corp (0.67%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VXUS’s holdings at 0.61% and 0.6%.
Risk Analysis
| IWM | VXUS | |
| Mean Return | 1.12 | 0.56 |
| R-squared | 77.73 | 98.39 |
| Std. Deviation | 18.87 | 15.12 |
| Alpha | -5.12 | 0.31 |
| Beta | 1.23 | 0.99 |
| Sharpe Ratio | 0.68 | 0.4 |
| Treynor Ratio | 9.56 | 5.14 |
The iShares Russell 2000 ETF (IWM) has a Standard Deviation of 18.87 with a Alpha of -5.12 and a R-squared of 77.73. Its Beta is 1.23 while IWM’s Mean Return is 1.12. Furthermore, the fund has a Sharpe Ratio of 0.68 and a Treynor Ratio of 9.56.
The Vanguard Total International Stock Index Fund ETF Shares (VXUS) has a Beta of 0.99 with a Alpha of 0.31 and a Treynor Ratio of 5.14. Its Mean Return is 0.56 while VXUS’s Standard Deviation is 15.12. Furthermore, the fund has a R-squared of 98.39 and a Sharpe Ratio of 0.4.
IWM’s Mean Return is 0.56 points higher than that of VXUS and its R-squared is 20.66 points lower. With a Standard Deviation of 18.87, IWM is slightly more volatile than VXUS. The Alpha and Beta of IWM are 5.43 points lower and 0.24 points higher than VXUS’s Alpha and Beta.
Performance
Annual Returns
| Year | IWM | VXUS |
| 2020 | 19.89% | 11.32% |
| 2019 | 25.42% | 21.58% |
| 2018 | -11.02% | -14.42% |
| 2017 | 14.66% | 27.52% |
| 2016 | 21.36% | 4.72% |
| 2015 | -4.33% | -4.28% |
| 2014 | 4.94% | -4.17% |
| 2013 | 38.85% | 15.16% |
| 2012 | 16.39% | 18.22% |
| 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 2017 was the strongest year for VXUS, returning 27.52% on an annual basis. The poorest year for VXUS in the last ten years was 2018, with a yield of -14.42%. Most years the Vanguard Total International Stock Index Fund ETF Shares has given investors modest returns, such as in 2010, 2016, and 2020, when gains were 0.0%, 4.72%, and 11.32% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWM | $10,000 | $30,207 | 13.52% |
| VXUS | $10,000 | $19,315 | 8.41% |
A $10,000 investment in IWM would have resulted in a final balance of $30,207. This is a profit of $20,207 over 9 years and amounts to a compound annual growth rate (CAGR) of 13.52%.
With a $10,000 investment in VXUS, the end total would have been $19,315. This equates to a $9,315 profit over 9 years and a compound annual growth rate (CAGR) of 8.41%.
IWM’s CAGR is 5.12 percentage points higher than that of VXUS and as a result, would have yielded $10,892 more on a $10,000 investment. Thus, IWM outperformed VXUS by 5.12% annually.
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