IWR vs. VTIP: What’s The Difference?

The iShares Russell Mid-Cap ETF (IWR) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. IWR is a iShares Mid-Cap Blend fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between IWR and VTIP? And which fund is better?

The expense ratio of IWR is 0.14 percentage points higher than VTIP’s (0.19% vs. 0.05%). IWR also has a high exposure to the technology sector while VTIP is mostly comprised of AAA bonds. Overall, IWR has provided higher returns than VTIP over the past ten years.

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

Summary

IWR VTIP
Name iShares Russell Mid-Cap ETF Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares
Category Mid-Cap Blend Inflation-Protected Bond
Issuer iShares Vanguard
AUM 29.84B 50.67B
Avg. Return 14.15% 1.79%
Div. Yield 0.99% 1.35%
Expense Ratio 0.19% 0.05%

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 Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.

IWR’s dividend yield is 0.36% lower than that of VTIP (0.99% vs. 1.35%). Also, IWR yielded on average 12.36% more per year over the past decade (14.15% vs. 1.79%). The expense ratio of IWR is 0.14 percentage points higher than VTIP’s (0.19% vs. 0.05%).

Fund Composition

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%.

VTIP - Holdings

VTIP Bond Sectors Weight
AAA 99.87%
Others 0.13%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.

Risk Analysis

IWR VTIP
Mean Return 1.17 0
R-squared 91.52 0
Std. Deviation 15.66 0
Alpha -2.8 0
Beta 1.11 0
Sharpe Ratio 0.86 0
Treynor Ratio 11.72 0

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

The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Sharpe Ratio of 0 with a Treynor Ratio of 0 and a Beta of 0. Its Standard Deviation is 0 while VTIP’s Mean Return is 0. Furthermore, the fund has a R-squared of 0 and a Alpha of 0.

IWR’s Mean Return is 1.17 points higher than that of VTIP and its R-squared is 91.52 points higher. With a Standard Deviation of 15.66, IWR is slightly more volatile than VTIP. The Alpha and Beta of IWR are 2.80 points lower and 1.11 points higher than VTIP’s Alpha and Beta.

Performance

Annual Returns

IWR vs. VTIP - Annual Returns

Year IWR VTIP
2020 16.91% 4.97%
2019 30.31% 4.83%
2018 -9.13% 0.54%
2017 18.32% 0.82%
2016 13.58% 2.71%
2015 -2.57% -0.15%
2014 13.03% -1.17%
2013 34.5% -1.55%
2012 17.13% 0.0%
2011 -1.67% 0.0%
2010 25.25% 0.0%

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 2020 was the strongest year for VTIP, returning 4.97% on an annual basis. The poorest year for VTIP in the last ten years was 2013, with a yield of -1.55%. Most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 0.54% respectively.

Portfolio Growth

IWR vs. VTIP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWR $10,000 $20,487 14.15%
VTIP $10,000 $11,305 1.79%

A $10,000 investment in IWR would have resulted in a final balance of $20,487. This is a profit of $10,487 over 7 years and amounts to a compound annual growth rate (CAGR) of 14.15%.

With a $10,000 investment in VTIP, the end total would have been $11,305. This equates to a $1,305 profit over 7 years and a compound annual growth rate (CAGR) of 1.79%.

IWR’s CAGR is 12.36 percentage points higher than that of VTIP and as a result, would have yielded $9,182 more on a $10,000 investment. Thus, IWR outperformed VTIP by 12.36% annually.


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