IWR vs. VBR: What’s The Difference?

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

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

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

Summary

IWR VBR
Name iShares Russell Mid-Cap ETF Vanguard Small-Cap Value Index Fund ETF Shares
Category Mid-Cap Blend Small Value
Issuer iShares Vanguard
AUM 29.84B 48.08B
Avg. Return 14.15% 12.28%
Div. Yield 0.99% 1.6%
Expense Ratio 0.19% 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 Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.

IWR’s dividend yield is 0.61% lower than that of VBR (0.99% vs. 1.6%). Also, IWR yielded on average 1.87% more per year over the past decade (14.15% vs. 12.28%). The expense ratio of IWR is 0.12 percentage points higher than VBR’s (0.19% vs. 0.07%).

Fund Composition

Industry Exposure

IWR vs. VBR - Industry Exposure

IWR VBR
Technology 19.67% 8.39%
Industrials 14.54% 18.44%
Energy 3.48% 5.15%
Communication Services 4.64% 1.77%
Utilities 4.46% 3.65%
Healthcare 11.76% 7.16%
Consumer Defensive 3.82% 4.36%
Real Estate 8.31% 10.92%
Financial Services 11.64% 20.04%
Consumer Cyclical 13.59% 13.82%
Basic Materials 4.1% 6.31%

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 Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.

VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.

IWR is 11.28% more exposed to the Technology sector than VBR (19.67% vs 8.39%). IWR’s exposure to Industrials and Consumer Cyclical stocks is 3.90% lower and 0.23% lower respectively (14.54% vs. 18.44% and 13.59% vs. 13.82%). In total, Consumer Defensive, Basic Materials, and Utilities also make up 1.94% less of the fund’s holdings compared to VBR (12.38% vs. 14.32%).

Holdings

IWR - Holdings

IWR Holdings Weight
IDEXX Laboratories Inc 0.51%
DocuSign Inc 0.51%
Twitter Inc 0.48%
Chipotle Mexican Grill Inc 0.47%
Roku Inc Class A 0.44%
Marvell Technology Inc 0.44%
DexCom Inc 0.44%
Trane Technologies PLC 0.43%
MSCI Inc 0.43%
Carrier Global Corp Ordinary Shares 0.43%

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%.

VBR - Holdings

VBR Holdings Weight
Diamondback Energy Inc 0.55%
VICI Properties Inc Ordinary Shares 0.54%
IDEX Corp 0.54%
Nuance Communications Inc 0.5%
Molina Healthcare Inc 0.48%
Signature Bank 0.46%
Novavax Inc 0.44%
Howmet Aerospace Inc 0.44%
Apollo Global Management Inc Class A 0.42%
Brown & Brown Inc 0.41%

VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.

Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.

Risk Analysis

IWR VBR
Mean Return 1.17 1.08
R-squared 91.52 82.2
Std. Deviation 15.66 18.37
Alpha -2.8 -5.09
Beta 1.11 1.23
Sharpe Ratio 0.86 0.67
Treynor Ratio 11.72 9.15

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

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Alpha of -5.09 with a Treynor Ratio of 9.15 and a Standard Deviation of 18.37. Its R-squared is 82.2 while VBR’s Mean Return is 1.08. Furthermore, the fund has a Beta of 1.23 and a Sharpe Ratio of 0.67.

IWR’s Mean Return is 0.09 points higher than that of VBR and its R-squared is 9.32 points higher. With a Standard Deviation of 15.66, IWR is slightly less volatile than VBR. The Alpha and Beta of IWR are 2.29 points higher and 0.12 points lower than VBR’s Alpha and Beta.

Performance

Annual Returns

IWR vs. VBR - Annual Returns

Year IWR VBR
2020 16.91% 5.82%
2019 30.31% 22.76%
2018 -9.13% -12.22%
2017 18.32% 11.79%
2016 13.58% 24.8%
2015 -2.57% -4.67%
2014 13.03% 10.55%
2013 34.5% 36.57%
2012 17.13% 18.78%
2011 -1.67% -4.05%
2010 25.25% 24.97%

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 VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% respectively.

Portfolio Growth

IWR vs. VBR - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWR $10,000 $39,751 14.15%
VBR $10,000 $32,611 12.28%

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 VBR, the end total would have been $32,611. This equates to a $22,611 profit over 11 years and a compound annual growth rate (CAGR) of 12.28%.

IWR’s CAGR is 1.87 percentage points higher than that of VBR and as a result, would have yielded $7,140 more on a $10,000 investment. Thus, IWR outperformed VBR by 1.87% 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 Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

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

Leave a Reply