IWR vs. VGK: What’s The Difference?

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

The expense ratio of IWR is 0.11 percentage points higher than VGK’s (0.19% vs. 0.08%). IWR also has a higher exposure to the technology sector and a lower standard deviation. Overall, IWR has provided higher returns than VGK over the past ten years.

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

Summary

IWR VGK
Name iShares Russell Mid-Cap ETF Vanguard FTSE Europe Index Fund ETF Shares
Category Mid-Cap Blend Europe Stock
Issuer iShares Vanguard
AUM 29.84B 25.7B
Avg. Return 14.15% 6.68%
Div. Yield 0.99% 2.52%
Expense Ratio 0.19% 0.08%

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 FTSE Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% with an expense ratio of 0.08%.

IWR’s dividend yield is 1.53% lower than that of VGK (0.99% vs. 2.52%). Also, IWR yielded on average 7.47% more per year over the past decade (14.15% vs. 6.68%). The expense ratio of IWR is 0.11 percentage points higher than VGK’s (0.19% vs. 0.08%).

Fund Composition

Industry Exposure

IWR vs. VGK - Industry Exposure

IWR VGK
Technology 19.67% 8.3%
Industrials 14.54% 15.58%
Energy 3.48% 4.3%
Communication Services 4.64% 5.09%
Utilities 4.46% 3.89%
Healthcare 11.76% 13.76%
Consumer Defensive 3.82% 11.39%
Real Estate 8.31% 2.57%
Financial Services 11.64% 15.85%
Consumer Cyclical 13.59% 11.6%
Basic Materials 4.1% 7.67%

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 FTSE Europe Index Fund ETF Shares (VGK) has the most exposure to the Financial Services sector at 15.85%. This is followed by Industrials and Healthcare at 15.58% and 13.76% respectively. Utilities (3.89%), Energy (4.3%), and Communication Services (5.09%) only make up 13.28% of the fund’s total assets.

VGK’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.67%, 8.3%, 11.39%, 11.6%, and 13.76%.

IWR is 11.37% more exposed to the Technology sector than VGK (19.67% vs 8.3%). IWR’s exposure to Industrials and Consumer Cyclical stocks is 1.04% lower and 1.99% higher respectively (14.54% vs. 15.58% and 13.59% vs. 11.6%). In total, Consumer Defensive, Basic Materials, and Utilities also make up 10.57% less of the fund’s holdings compared to VGK (12.38% vs. 22.95%).

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%.

VGK - Holdings

VGK Holdings Weight
Nestle SA 2.82%
ASML Holding NV 2.2%
Roche Holding AG 2.13%
LVMH Moet Hennessy Louis Vuitton SE 1.58%
Novartis AG 1.55%
AstraZeneca PLC 1.27%
SAP SE 1.25%
Unilever PLC 1.23%
Novo Nordisk A/S B 1.09%
Siemens AG 0.96%

VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.

AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.

Risk Analysis

IWR VGK
Mean Return 1.17 0.61
R-squared 91.52 92.76
Std. Deviation 15.66 16.65
Alpha -2.8 0.45
Beta 1.11 1.06
Sharpe Ratio 0.86 0.4
Treynor Ratio 11.72 5.12

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

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Alpha of 0.45 with a Beta of 1.06 and a Treynor Ratio of 5.12. Its R-squared is 92.76 while VGK’s Mean Return is 0.61. Furthermore, the fund has a Standard Deviation of 16.65 and a Sharpe Ratio of 0.4.

IWR’s Mean Return is 0.56 points higher than that of VGK and its R-squared is 1.24 points lower. With a Standard Deviation of 15.66, IWR is slightly less volatile than VGK. The Alpha and Beta of IWR are 3.25 points lower and 0.05 points higher than VGK’s Alpha and Beta.

Performance

Annual Returns

IWR vs. VGK - Annual Returns

Year IWR VGK
2020 16.91% 6.5%
2019 30.31% 24.26%
2018 -9.13% -14.79%
2017 18.32% 27.06%
2016 13.58% -0.59%
2015 -2.57% -1.87%
2014 13.03% -6.56%
2013 34.5% 24.93%
2012 17.13% 21.01%
2011 -1.67% -11.49%
2010 25.25% 5.01%

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 2017 was the strongest year for VGK, returning 27.06% on an annual basis. The poorest year for VGK in the last ten years was 2018, with a yield of -14.79%. Most years the Vanguard FTSE Europe Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were -0.59%, 5.01%, and 6.5% respectively.

Portfolio Growth

IWR vs. VGK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWR $10,000 $39,751 14.15%
VGK $10,000 $18,350 6.68%

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 VGK, the end total would have been $18,350. This equates to a $8,350 profit over 11 years and a compound annual growth rate (CAGR) of 6.68%.

IWR’s CAGR is 7.47 percentage points higher than that of VGK and as a result, would have yielded $21,401 more on a $10,000 investment. Thus, IWR outperformed VGK by 7.47% annually.


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