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IWR vs. VBK: What’s The Difference?

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

The expense ratio of IWR is 0.12 percentage points higher than VBK’s (0.19% vs. 0.07%). IWR also has a lower exposure to the technology sector and a lower standard deviation. Overall, IWR has provided lower returns than VBK over the past ten years.

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

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Summary

IWRVBK
NameiShares Russell Mid-Cap ETFVanguard Small-Cap Growth Index Fund ETF Shares
CategoryMid-Cap BlendSmall Growth
IssueriSharesVanguard
AUM29.84B37.89B
Avg. Return14.15%16.53%
Div. Yield0.99%0.45%
Expense Ratio0.19%0.07%

The iShares Russell Mid-Cap ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% with an expense ratio of 0.19%.

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.

IWR’s dividend yield is 0.54% higher than that of VBK (0.99% vs. 0.45%). Also, IWR yielded on average 2.38% less per year over the past decade (14.15% vs. 16.53%). The expense ratio of IWR is 0.12 percentage points higher than VBK’s (0.19% vs. 0.07%).

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Fund Composition

Industry Exposure

IWR vs. VBK - Industry Exposure

IWRVBK
Technology19.67%27.87%
Industrials14.54%13.19%
Energy3.48%1.77%
Communication Services4.64%3.24%
Utilities4.46%0.32%
Healthcare11.76%23.24%
Consumer Defensive3.82%3.83%
Real Estate8.31%7.87%
Financial Services11.64%4.05%
Consumer Cyclical13.59%12.13%
Basic Materials4.1%2.49%

The iShares Russell Mid-Cap ETF (IWR) has the most exposure to the Technology sector at 19.67%. This is followed by Industrials and Consumer Cyclical at 14.54% and 13.59% respectively. Consumer Defensive (3.82%), Basic Materials (4.1%), and Utilities (4.46%) only make up 12.38% of the fund’s total assets.

IWR’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Healthcare, and Consumer Cyclical stocks at 4.64%, 8.31%, 11.64%, 11.76%, and 13.59%.

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.

VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.

IWR is 8.20% less exposed to the Technology sector than VBK (19.67% vs 27.87%). IWR’s exposure to Industrials and Consumer Cyclical stocks is 1.35% higher and 1.46% higher respectively (14.54% vs. 13.19% and 13.59% vs. 12.13%). In total, Consumer Defensive, Basic Materials, and Utilities also make up 5.74% more of the fund’s holdings compared to VBK (12.38% vs. 6.64%).

Holdings

IWR - Holdings

IWR HoldingsWeight
IDEXX Laboratories Inc0.51%
DocuSign Inc0.51%
Twitter Inc0.48%
Chipotle Mexican Grill Inc0.47%
Roku Inc Class A0.44%
Marvell Technology Inc0.44%
DexCom Inc0.44%
Trane Technologies PLC0.43%
MSCI Inc0.43%
Carrier Global Corp Ordinary Shares0.43%

IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.

Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.

VBK - Holdings

VBK HoldingsWeight
Charles River Laboratories International Inc0.78%
Pool Corp0.73%
Bio-Techne Corp0.73%
Avantor Inc0.73%
PerkinElmer Inc0.72%
Entegris Inc0.7%
PTC Inc0.62%
Fair Isaac Corp0.57%
Bill.com Holdings Inc Ordinary Shares0.56%
Avalara Inc0.55%

VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.

Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.

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Risk Analysis

IWRVBK
Mean Return1.171.22
R-squared91.5280.56
Std. Deviation15.6617.95
Alpha-2.8-2.81
Beta1.111.18
Sharpe Ratio0.860.78
Treynor Ratio11.7211.18

The iShares Russell Mid-Cap ETF (IWR) has a Sharpe Ratio of 0.86 with a Treynor Ratio of 11.72 and a Beta of 1.11. Its Alpha is -2.8 while IWR’s Mean Return is 1.17. Furthermore, the fund has a R-squared of 91.52 and a Standard Deviation of 15.66.

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Standard Deviation of 17.95 with a Treynor Ratio of 11.18 and a Beta of 1.18. Its Alpha is -2.81 while VBK’s R-squared is 80.56. Furthermore, the fund has a Mean Return of 1.22 and a Sharpe Ratio of 0.78.

IWR’s Mean Return is 0.05 points lower than that of VBK and its R-squared is 10.96 points higher. With a Standard Deviation of 15.66, IWR is slightly less volatile than VBK. The Alpha and Beta of IWR are 0.01 points higher and 0.07 points lower than VBK’s Alpha and Beta.

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Performance

Annual Returns

IWR vs. VBK - Annual Returns

YearIWRVBK
202016.91%35.29%
201930.31%32.75%
2018-9.13%-5.68%
201718.32%21.9%
201613.58%10.74%
2015-2.57%-2.51%
201413.03%4.02%
201334.5%38.18%
201217.13%17.67%
2011-1.67%-1.43%
201025.25%30.87%

IWR had its best year in 2013 with an annual return of 34.5%. IWR’s worst year over the past decade yielded -9.13% and occurred in 2018. In most years the iShares Russell Mid-Cap ETF provided moderate returns such as in 2016, 2020, and 2012 where annual returns amounted to 13.58%, 16.91%, and 17.13% respectively.

The year 2013 was the strongest year for VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.

Portfolio Growth

IWR vs. VBK - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IWR$10,000$39,75114.15%
VBK$10,000$48,63916.53%

A $10,000 investment in IWR would have resulted in a final balance of $39,751. This is a profit of $29,751 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.15%.

With a $10,000 investment in VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.

IWR’s CAGR is 2.38 percentage points lower than that of VBK and as a result, would have yielded $8,888 less on a $10,000 investment. Thus, IWR performed worse than VBK by 2.38% annually.


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