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.
|Name||iShares Russell Mid-Cap ETF||Vanguard Small-Cap Value Index Fund ETF Shares|
|Category||Mid-Cap Blend||Small Value|
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%).
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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%).
|IDEXX Laboratories Inc||0.51%|
|Chipotle Mexican Grill Inc||0.47%|
|Roku Inc Class A||0.44%|
|Marvell Technology Inc||0.44%|
|Trane Technologies PLC||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%.
|Diamondback Energy Inc||0.55%|
|VICI Properties Inc Ordinary Shares||0.54%|
|Nuance Communications Inc||0.5%|
|Molina Healthcare Inc||0.48%|
|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%.
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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.
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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.
|Fund||Initial Balance||Final Balance||CAGR|
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.
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