IWP vs. VHT: What’s The Difference?

The iShares Russell Mid-Cap Growth ETF (IWP) and the Vanguard Health Care Index Fund ETF Shares (VHT) are both among the Top 100 ETFs. IWP is a iShares Mid-Cap Growth fund and VHT is a Vanguard Health fund. So, what’s the difference between IWP and VHT? And which fund is better?

The expense ratio of IWP is 0.14 percentage points higher than VHT’s (0.24% vs. 0.1%). IWP also has a higher exposure to the technology sector and a higher standard deviation. Overall, IWP has provided higher returns than VHT over the past 11 years.

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

Summary

IWP VHT
Name iShares Russell Mid-Cap Growth ETF Vanguard Health Care Index Fund ETF Shares
Category Mid-Cap Growth Health
Issuer iShares Vanguard
AUM 15.7B 17.94B
Avg. Return 16.75% 16.04%
Div. Yield 0.26% 1.15%
Expense Ratio 0.24% 0.1%

The iShares Russell Mid-Cap Growth ETF (IWP) is a Mid-Cap Growth fund that is issued by iShares. It currently has 15.7B total assets under management and has yielded an average annual return of 16.75% over the past 10 years. The fund has a dividend yield of 0.26% with an expense ratio of 0.24%.

The Vanguard Health Care Index Fund ETF Shares (VHT) is a Health fund that is issued by Vanguard. It currently has 17.94B total assets under management and has yielded an average annual return of 16.04% over the past 10 years. The fund has a dividend yield of 1.15% with an expense ratio of 0.1%.

IWP’s dividend yield is 0.89% lower than that of VHT (0.26% vs. 1.15%). Also, IWP yielded on average 0.71% more per year over the past decade (16.75% vs. 16.04%). The expense ratio of IWP is 0.14 percentage points higher than VHT’s (0.24% vs. 0.1%).

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Fund Composition

Industry Exposure

IWP vs. VHT - Industry Exposure

IWP VHT
Technology 33.88% 0.05%
Industrials 14.09% 0.05%
Energy 1.51% 0.0%
Communication Services 6.32% 0.0%
Utilities 0.16% 0.0%
Healthcare 16.79% 99.57%
Consumer Defensive 2.32% 0.0%
Real Estate 2.46% 0.0%
Financial Services 4.52% 0.02%
Consumer Cyclical 16.09% 0.0%
Basic Materials 1.86% 0.31%

The iShares Russell Mid-Cap Growth ETF (IWP) has the most exposure to the Technology sector at 33.88%. This is followed by Healthcare and Consumer Cyclical at 16.79% and 16.09% respectively. Energy (1.51%), Basic Materials (1.86%), and Consumer Defensive (2.32%) only make up 5.69% of the fund’s total assets.

IWP’s mid-section with moderate exposure is comprised of Real Estate, Financial Services, Communication Services, Industrials, and Consumer Cyclical stocks at 2.46%, 4.52%, 6.32%, 14.09%, and 16.09%.

The Vanguard Health Care Index Fund ETF Shares (VHT) has the most exposure to the Healthcare sector at 99.57%. This is followed by Basic Materials and Technology at 0.31% and 0.05% respectively. Real Estate (0.0%), Consumer Defensive (0.0%), and Utilities (0.0%) only make up 0.00% of the fund’s total assets.

VHT’s mid-section with moderate exposure is comprised of Communication Services, Energy, Financial Services, Industrials, and Technology stocks at 0.0%, 0.0%, 0.02%, 0.05%, and 0.05%.

IWP is 33.83% more exposed to the Technology sector than VHT (33.88% vs 0.05%). IWP’s exposure to Healthcare and Consumer Cyclical stocks is 82.78% lower and 16.09% higher respectively (16.79% vs. 99.57% and 16.09% vs. 0.0%). In total, Energy, Basic Materials, and Consumer Defensive also make up 5.38% more of the fund’s holdings compared to VHT (5.69% vs. 0.31%).

Holdings

IWP - Holdings

IWP Holdings Weight
IDEXX Laboratories Inc 1.3%
DocuSign Inc 1.3%
Roku Inc Class A 1.29%
Match Group Inc 1.06%
Chipotle Mexican Grill Inc 1.06%
Pinterest Inc 1.05%
Veeva Systems Inc Class A 1.04%
Palantir Technologies Inc Ordinary Shares – Class A 1.04%
Lululemon Athletica Inc 1.01%
DexCom Inc 1.0%

IWP’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Roku Inc Class A, Match Group Inc, and Chipotle Mexican Grill Inc at 1.3%, 1.3%, 1.29%, 1.06%, and 1.06%.

Pinterest Inc (1.05%), Veeva Systems Inc Class A (1.04%), and Palantir Technologies Inc Ordinary Shares – Class A (1.04%) have a slightly smaller but still significant weight. Lululemon Athletica Inc and DexCom Inc are also represented in the IWP’s holdings at 1.01% and 1.0%.

VHT - Holdings

VHT Holdings Weight
Johnson & Johnson 7.34%
UnitedHealth Group Inc 6.44%
Pfizer Inc 3.7%
Abbott Laboratories 3.48%
Thermo Fisher Scientific Inc 3.37%
AbbVie Inc 3.37%
Merck & Co Inc 3.33%
Eli Lilly and Co 3.17%
Danaher Corp 2.91%
Medtronic PLC 2.83%

VHT’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and Thermo Fisher Scientific Inc at 7.34%, 6.44%, 3.7%, 3.48%, and 3.37%.

AbbVie Inc (3.37%), Merck & Co Inc (3.33%), and Eli Lilly and Co (3.17%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the VHT’s holdings at 2.91% and 2.83%.

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Risk Analysis

IWP VHT
Mean Return 1.27 1.33
R-squared 87.01 59.86
Std. Deviation 16.05 13.58
Alpha -1.03 7.99
Beta 1.1 0.75
Sharpe Ratio 0.91 1.13
Treynor Ratio 12.98 20.74

The iShares Russell Mid-Cap Growth ETF (IWP) has a Treynor Ratio of 12.98 with a Mean Return of 1.27 and a Beta of 1.1. Its Sharpe Ratio is 0.91 while IWP’s Alpha is -1.03. Furthermore, the fund has a Standard Deviation of 16.05 and a R-squared of 87.01.

The Vanguard Health Care Index Fund ETF Shares (VHT) has a Mean Return of 1.33 with a R-squared of 59.86 and a Beta of 0.75. Its Standard Deviation is 13.58 while VHT’s Sharpe Ratio is 1.13. Furthermore, the fund has a Alpha of 7.99 and a Treynor Ratio of 20.74.

IWP’s Mean Return is 0.06 points lower than that of VHT and its R-squared is 27.15 points higher. With a Standard Deviation of 16.05, IWP is slightly more volatile than VHT. The Alpha and Beta of IWP are 9.02 points lower and 0.35 points higher than VHT’s Alpha and Beta.

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Performance

Annual Returns

IWP vs. VHT - Annual Returns

Year IWP VHT
2020 35.29% 18.21%
2019 35.14% 21.97%
2018 -4.95% 5.55%
2017 24.98% 23.34%
2016 7.15% -3.33%
2015 -0.39% 7.22%
2014 11.68% 25.38%
2013 35.44% 42.67%
2012 15.62% 19.1%
2011 -1.82% 10.57%
2010 26.1% 5.75%

IWP had its best year in 2013 with an annual return of 35.44%. IWP’s worst year over the past decade yielded -4.95% and occurred in 2018. In most years the iShares Russell Mid-Cap Growth ETF provided moderate returns such as in 2014, 2012, and 2017 where annual returns amounted to 11.68%, 15.62%, and 24.98% respectively.

The year 2013 was the strongest year for VHT, returning 42.67% on an annual basis. The poorest year for VHT in the last ten years was 2016, with a yield of -3.33%. Most years the Vanguard Health Care Index Fund ETF Shares has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 10.57%, 18.21%, and 19.1% respectively.

Portfolio Growth

IWP vs. VHT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWP $10,000 $50,191 16.75%
VHT $10,000 $48,464 16.04%

A $10,000 investment in IWP would have resulted in a final balance of $50,191. This is a profit of $40,191 over 11 years and amounts to a compound annual growth rate (CAGR) of 16.75%.

With a $10,000 investment in VHT, the end total would have been $48,464. This equates to a $38,464 profit over 11 years and a compound annual growth rate (CAGR) of 16.04%.

IWP’s CAGR is 0.71 percentage points higher than that of VHT and as a result, would have yielded $1,727 more on a $10,000 investment. Thus, IWP outperformed VHT by 0.71% annually.


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