IWN vs. VOE: What’s The Difference?

The iShares Russell 2000 Value ETF (IWN) and the Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) are both among the Top 100 ETFs. IWN is a iShares Small Value fund and VOE is a Vanguard Mid-Cap Value fund. So, what’s the difference between IWN and VOE? And which fund is better?

The expense ratio of IWN is 0.17 percentage points higher than VOE’s (0.24% vs. 0.07%). IWN also has a higher exposure to the financial services sector and a higher standard deviation. Overall, IWN has provided lower returns than VOE over the past 11 years.

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

Summary

IWN VOE
Name iShares Russell 2000 Value ETF Vanguard Mid-Cap Value Index Fund ETF Shares
Category Small Value Mid-Cap Value
Issuer iShares Vanguard
AUM 15.48B 26.78B
Avg. Return 10.96% 12.52%
Div. Yield 1.26% 1.87%
Expense Ratio 0.24% 0.07%

The iShares Russell 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.

The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) is a Mid-Cap Value fund that is issued by Vanguard. It currently has 26.78B total assets under management and has yielded an average annual return of 12.52% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.07%.

IWN’s dividend yield is 0.61% lower than that of VOE (1.26% vs. 1.87%). Also, IWN yielded on average 1.56% less per year over the past decade (10.96% vs. 12.52%). The expense ratio of IWN is 0.17 percentage points higher than VOE’s (0.24% vs. 0.07%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

IWN vs. VOE - Industry Exposure

IWN VOE
Technology 6.02% 9.85%
Industrials 14.58% 9.4%
Energy 5.84% 5.69%
Communication Services 4.17% 5.27%
Utilities 4.69% 10.93%
Healthcare 10.94% 7.04%
Consumer Defensive 3.77% 4.85%
Real Estate 14.36% 11.48%
Financial Services 22.97% 18.26%
Consumer Cyclical 8.39% 11.8%
Basic Materials 4.29% 5.44%

The iShares Russell 2000 Value ETF (IWN) has the most exposure to the Financial Services sector at 22.97%. This is followed by Industrials and Real Estate at 14.58% and 14.36% respectively. Communication Services (4.17%), Basic Materials (4.29%), and Utilities (4.69%) only make up 13.15% of the fund’s total assets.

IWN’s mid-section with moderate exposure is comprised of Energy, Technology, Consumer Cyclical, Healthcare, and Real Estate stocks at 5.84%, 6.02%, 8.39%, 10.94%, and 14.36%.

The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has the most exposure to the Financial Services sector at 18.26%. This is followed by Consumer Cyclical and Real Estate at 11.8% and 11.48% respectively. Communication Services (5.27%), Basic Materials (5.44%), and Energy (5.69%) only make up 16.40% of the fund’s total assets.

VOE’s mid-section with moderate exposure is comprised of Healthcare, Industrials, Technology, Utilities, and Real Estate stocks at 7.04%, 9.4%, 9.85%, 10.93%, and 11.48%.

IWN is 4.71% more exposed to the Financial Services sector than VOE (22.97% vs 18.26%). IWN’s exposure to Industrials and Real Estate stocks is 5.18% higher and 2.88% higher respectively (14.58% vs. 9.4% and 14.36% vs. 11.48%). In total, Communication Services, Basic Materials, and Utilities also make up 8.49% less of the fund’s holdings compared to VOE (13.15% vs. 21.64%).

Holdings

IWN - Holdings

IWN Holdings Weight
AMC Entertainment Holdings Inc Class A 1.06%
Tenet Healthcare Corp 0.47%
Stag Industrial Inc 0.47%
Ovintiv Inc 0.45%
EMCOR Group Inc 0.42%
Valley National Bancorp 0.37%
Chesapeake Energy Corp Ordinary Shares – New 0.37%
Agree Realty Corp 0.36%
Macy’s Inc 0.35%
Essent Group Ltd 0.35%

IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.

Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.

VOE - Holdings

VOE Holdings Weight
Carrier Global Corp Ordinary Shares 1.28%
International Flavors & Fragrances Inc 1.13%
Motorola Solutions Inc 1.12%
Discover Financial Services 1.09%
Welltower Inc 1.05%
Corteva Inc 0.99%
Valero Energy Corp 0.97%
Corning Inc 0.95%
Willis Towers Watson PLC 0.9%
D.R. Horton Inc 0.89%

VOE’s Top Holdings are Carrier Global Corp Ordinary Shares, International Flavors & Fragrances Inc, Motorola Solutions Inc, Discover Financial Services, and Welltower Inc at 1.28%, 1.13%, 1.12%, 1.09%, and 1.05%.

Corteva Inc (0.99%), Valero Energy Corp (0.97%), and Corning Inc (0.95%) have a slightly smaller but still significant weight. Willis Towers Watson PLC and D.R. Horton Inc are also represented in the VOE’s holdings at 0.9% and 0.89%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

IWN VOE
Mean Return 1.01 1.05
R-squared 72.64 88.76
Std. Deviation 19.28 15.98
Alpha -6.32 -3.77
Beta 1.21 1.11
Sharpe Ratio 0.59 0.75
Treynor Ratio 8.3 10.19

The iShares Russell 2000 Value ETF (IWN) has a Standard Deviation of 19.28 with a Sharpe Ratio of 0.59 and a Beta of 1.21. Its Treynor Ratio is 8.3 while IWN’s Mean Return is 1.01. Furthermore, the fund has a Alpha of -6.32 and a R-squared of 72.64.

The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a Standard Deviation of 15.98 with a Mean Return of 1.05 and a Alpha of -3.77. Its R-squared is 88.76 while VOE’s Sharpe Ratio is 0.75. Furthermore, the fund has a Treynor Ratio of 10.19 and a Beta of 1.11.

IWN’s Mean Return is 0.04 points lower than that of VOE and its R-squared is 16.12 points lower. With a Standard Deviation of 19.28, IWN is slightly more volatile than VOE. The Alpha and Beta of IWN are 2.55 points lower and 0.10 points higher than VOE’s Alpha and Beta.

BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Coinbase - the simplest and cheapest broker I've found! Click here to read more (link to Coinbase).

Performance

Annual Returns

IWN vs. VOE - Annual Returns

Year IWN VOE
2020 4.5% 2.5%
2019 22.17% 27.98%
2018 -12.94% -12.41%
2017 7.73% 17.05%
2016 31.64% 15.26%
2015 -7.53% -1.8%
2014 4.13% 13.98%
2013 34.3% 37.65%
2012 17.92% 16.04%
2011 -5.64% -0.32%
2010 24.29% 21.83%

IWN had its best year in 2013 with an annual return of 34.3%. IWN’s worst year over the past decade yielded -12.94% and occurred in 2018. In most years the iShares Russell 2000 Value ETF provided moderate returns such as in 2020, 2017, and 2012 where annual returns amounted to 4.5%, 7.73%, and 17.92% respectively.

The year 2013 was the strongest year for VOE, returning 37.65% on an annual basis. The poorest year for VOE in the last ten years was 2018, with a yield of -12.41%. Most years the Vanguard Mid-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 13.98%, 15.26%, and 16.04% respectively.

Portfolio Growth

IWN vs. VOE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWN $10,000 $28,189 10.96%
VOE $10,000 $33,655 12.52%

A $10,000 investment in IWN would have resulted in a final balance of $28,189. This is a profit of $18,189 over 11 years and amounts to a compound annual growth rate (CAGR) of 10.96%.

With a $10,000 investment in VOE, the end total would have been $33,655. This equates to a $23,655 profit over 11 years and a compound annual growth rate (CAGR) of 12.52%.

IWN’s CAGR is 1.56 percentage points lower than that of VOE and as a result, would have yielded $5,466 less on a $10,000 investment. Thus, IWN performed worse than VOE by 1.56% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Coinbase. I've started allocating a small amount of assets to the growing crypto space and Coinbase has just been a breeze to use. Once you register, make sure to also open an Coinbase Pro account to buy crypto at the lowest fees on the market (just 0.1%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply