The iShares Russell Mid-Cap ETF (IWR) and the Vanguard Health Care Index Fund ETF Shares (VHT) are both among the Top 100 ETFs. IWR is a iShares Mid-Cap Blend fund and VHT is a Vanguard Health fund. So, what’s the difference between IWR and VHT? And which fund is better?
The expense ratio of IWR is 0.09 percentage points higher than VHT’s (0.19% vs. 0.1%). IWR also has a higher exposure to the technology sector and a higher standard deviation. Overall, IWR has provided lower returns than VHT over the past ten years.
In this article, we’ll compare IWR vs. VHT. We’ll look at industry exposure and risk metrics, as well as at their performance and holdings. Moreover, I’ll also discuss IWR’s and VHT’s annual returns, portfolio growth, and fund composition and examine how these affect their overall returns.
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Summary
| IWR | VHT | |
| Name | iShares Russell Mid-Cap ETF | Vanguard Health Care Index Fund ETF Shares |
| Category | Mid-Cap Blend | Health |
| Issuer | iShares | Vanguard |
| AUM | 29.84B | 17.94B |
| Avg. Return | 14.15% | 16.04% |
| Div. Yield | 0.99% | 1.15% |
| Expense Ratio | 0.19% | 0.1% |
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 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%.
IWR’s dividend yield is 0.16% lower than that of VHT (0.99% vs. 1.15%). Also, IWR yielded on average 1.89% less per year over the past decade (14.15% vs. 16.04%). The expense ratio of IWR is 0.09 percentage points higher than VHT’s (0.19% vs. 0.1%).
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Fund Composition
Industry Exposure
| IWR | VHT | |
| Technology | 19.67% | 0.05% |
| Industrials | 14.54% | 0.05% |
| Energy | 3.48% | 0.0% |
| Communication Services | 4.64% | 0.0% |
| Utilities | 4.46% | 0.0% |
| Healthcare | 11.76% | 99.57% |
| Consumer Defensive | 3.82% | 0.0% |
| Real Estate | 8.31% | 0.0% |
| Financial Services | 11.64% | 0.02% |
| Consumer Cyclical | 13.59% | 0.0% |
| Basic Materials | 4.1% | 0.31% |
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 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%.
IWR is 19.62% more exposed to the Technology sector than VHT (19.67% vs 0.05%). IWR’s exposure to Industrials and Consumer Cyclical stocks is 14.49% higher and 13.59% higher respectively (14.54% vs. 0.05% and 13.59% vs. 0.0%). In total, Consumer Defensive, Basic Materials, and Utilities also make up 12.07% more of the fund’s holdings compared to VHT (12.38% vs. 0.31%).
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%.
| 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%.
Risk Analysis
| IWR | VHT | |
| Mean Return | 1.17 | 1.33 |
| R-squared | 91.52 | 59.86 |
| Std. Deviation | 15.66 | 13.58 |
| Alpha | -2.8 | 7.99 |
| Beta | 1.11 | 0.75 |
| Sharpe Ratio | 0.86 | 1.13 |
| Treynor Ratio | 11.72 | 20.74 |
The iShares Russell Mid-Cap ETF (IWR) has a Mean Return of 1.17 with a R-squared of 91.52 and a Alpha of -2.8. Its Standard Deviation is 15.66 while IWR’s Sharpe Ratio is 0.86. Furthermore, the fund has a Beta of 1.11 and a Treynor Ratio of 11.72.
The Vanguard Health Care Index Fund ETF Shares (VHT) has a Treynor Ratio of 20.74 with a Beta of 0.75 and a Standard Deviation of 13.58. Its Mean Return is 1.33 while VHT’s R-squared is 59.86. Furthermore, the fund has a Sharpe Ratio of 1.13 and a Alpha of 7.99.
IWR’s Mean Return is 0.16 points lower than that of VHT and its R-squared is 31.66 points higher. With a Standard Deviation of 15.66, IWR is slightly more volatile than VHT. The Alpha and Beta of IWR are 10.79 points lower and 0.36 points higher than VHT’s Alpha and Beta.
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Performance
Annual Returns
| Year | IWR | VHT |
| 2020 | 16.91% | 18.21% |
| 2019 | 30.31% | 21.97% |
| 2018 | -9.13% | 5.55% |
| 2017 | 18.32% | 23.34% |
| 2016 | 13.58% | -3.33% |
| 2015 | -2.57% | 7.22% |
| 2014 | 13.03% | 25.38% |
| 2013 | 34.5% | 42.67% |
| 2012 | 17.13% | 19.1% |
| 2011 | -1.67% | 10.57% |
| 2010 | 25.25% | 5.75% |
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 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
| Fund | Initial Balance | Final Balance | CAGR |
| IWR | $10,000 | $39,751 | 14.15% |
| VHT | $10,000 | $48,464 | 16.04% |
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 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%.
IWR’s CAGR is 1.89 percentage points lower than that of VHT and as a result, would have yielded $8,713 less on a $10,000 investment. Thus, IWR performed worse than VHT by 1.89% annually.
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