The Vanguard Small-Cap Index Fund ETF Shares (VB) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and ACWI is a iShares N/A fund. So, what’s the difference between VB and ACWI? And which fund is better?
The expense ratio of VB is 0.27 percentage points lower than ACWI’s (0.05% vs. 0.32%). VB also has a lower exposure to the technology sector and a higher standard deviation. Overall, VB has provided higher returns than ACWI over the past ten years.
In this article, we’ll compare VB vs. ACWI. We’ll look at portfolio growth and fund composition, as well as at their performance and holdings. Moreover, I’ll also discuss VB’s and ACWI’s annual returns, industry exposure, and risk metrics and examine how these affect their overall returns.
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Summary
| VB | ACWI | |
| Name | Vanguard Small-Cap Index Fund ETF Shares | iShares MSCI ACWI ETF |
| Category | Small Blend | N/A |
| Issuer | Vanguard | iShares |
| AUM | 137.72B | 16.85B |
| Avg. Return | 14.25% | 10.21% |
| Div. Yield | 1.14% | 1.39% |
| Expense Ratio | 0.05% | 0.32% |
The Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.05%.
The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.
VB’s dividend yield is 0.25% lower than that of ACWI (1.14% vs. 1.39%). Also, VB yielded on average 4.04% more per year over the past decade (14.25% vs. 10.21%). The expense ratio of VB is 0.27 percentage points lower than ACWI’s (0.05% vs. 0.32%).
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Fund Composition
Industry Exposure
| VB | ACWI | |
| Technology | 16.85% | 20.41% |
| Industrials | 16.11% | 9.65% |
| Energy | 3.67% | 3.48% |
| Communication Services | 2.4% | 9.87% |
| Utilities | 2.19% | 2.61% |
| Healthcare | 14.34% | 11.74% |
| Consumer Defensive | 4.14% | 7.15% |
| Real Estate | 9.56% | 2.75% |
| Financial Services | 13.06% | 15.58% |
| Consumer Cyclical | 13.03% | 12.01% |
| Basic Materials | 4.63% | 4.73% |
The Vanguard Small-Cap Index Fund ETF Shares (VB) has the most exposure to the Technology sector at 16.85%. This is followed by Industrials and Healthcare at 16.11% and 14.34% respectively. Communication Services (2.4%), Energy (3.67%), and Consumer Defensive (4.14%) only make up 10.21% of the fund’s total assets.
VB’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Healthcare stocks at 4.63%, 9.56%, 13.03%, 13.06%, and 14.34%.
The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.
ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.
VB is 3.56% less exposed to the Technology sector than ACWI (16.85% vs 20.41%). VB’s exposure to Industrials and Healthcare stocks is 6.46% higher and 2.60% higher respectively (16.11% vs. 9.65% and 14.34% vs. 11.74%). In total, Communication Services, Energy, and Consumer Defensive also make up 10.29% less of the fund’s holdings compared to ACWI (10.21% vs. 20.50%).
Holdings
| VB Holdings | Weight |
| Charles River Laboratories International Inc | 0.34% |
| Pool Corp | 0.32% |
| Bio-Techne Corp | 0.32% |
| Avantor Inc | 0.32% |
| PerkinElmer Inc | 0.31% |
| Diamondback Energy Inc | 0.31% |
| VICI Properties Inc Ordinary Shares | 0.3% |
| IDEX Corp | 0.3% |
| Entegris Inc | 0.3% |
| Novavax Inc | 0.29% |
VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.
Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.
| ACWI Holdings | Weight |
| Apple Inc | 3.44% |
| Microsoft Corp | 2.91% |
| Amazon.com Inc | 2.21% |
| Facebook Inc A | 1.25% |
| Alphabet Inc Class C | 1.12% |
| Alphabet Inc A | 1.09% |
| Taiwan Semiconductor Manufacturing Co Ltd | 0.79% |
| Tesla Inc | 0.78% |
| NVIDIA Corp | 0.74% |
| JPMorgan Chase & Co | 0.71% |
ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.
Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.
Risk Analysis
| VB | ACWI | |
| Mean Return | 1.15 | 0.89 |
| R-squared | 85.03 | 99.96 |
| Std. Deviation | 17.82 | 14.05 |
| Alpha | -4.02 | 0.15 |
| Beta | 1.21 | 1 |
| Sharpe Ratio | 0.74 | 0.71 |
| Treynor Ratio | 10.15 | 9.45 |
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Alpha of -4.02 with a Standard Deviation of 17.82 and a Sharpe Ratio of 0.74. Its Beta is 1.21 while VB’s Mean Return is 1.15. Furthermore, the fund has a Treynor Ratio of 10.15 and a R-squared of 85.03.
The iShares MSCI ACWI ETF (ACWI) has a Treynor Ratio of 9.45 with a R-squared of 99.96 and a Sharpe Ratio of 0.71. Its Beta is 1 while ACWI’s Mean Return is 0.89. Furthermore, the fund has a Alpha of 0.15 and a Standard Deviation of 14.05.
VB’s Mean Return is 0.26 points higher than that of ACWI and its R-squared is 14.93 points lower. With a Standard Deviation of 17.82, VB is slightly more volatile than ACWI. The Alpha and Beta of VB are 4.17 points lower and 0.21 points higher than ACWI’s Alpha and Beta.
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Performance
Annual Returns
| Year | VB | ACWI |
| 2020 | 19.08% | 16.38% |
| 2019 | 27.37% | 26.7% |
| 2018 | -9.3% | -9.15% |
| 2017 | 16.24% | 24.35% |
| 2016 | 18.31% | 8.22% |
| 2015 | -3.65% | -2.39% |
| 2014 | 7.51% | 4.64% |
| 2013 | 37.8% | 22.91% |
| 2012 | 18.22% | 15.99% |
| 2011 | -2.68% | -7.6% |
| 2010 | 27.89% | 12.31% |
VB had its best year in 2013 with an annual return of 37.8%. VB’s worst year over the past decade yielded -9.3% and occurred in 2018. In most years the Vanguard Small-Cap Index Fund ETF Shares provided moderate returns such as in 2017, 2012, and 2016 where annual returns amounted to 16.24%, 18.22%, and 18.31% respectively.
The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VB | $10,000 | $39,734 | 14.25% |
| ACWI | $10,000 | $27,241 | 10.21% |
A $10,000 investment in VB would have resulted in a final balance of $39,734. This is a profit of $29,734 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.25%.
With a $10,000 investment in ACWI, the end total would have been $27,241. This equates to a $17,241 profit over 11 years and a compound annual growth rate (CAGR) of 10.21%.
VB’s CAGR is 4.04 percentage points higher than that of ACWI and as a result, would have yielded $12,493 more on a $10,000 investment. Thus, VB outperformed ACWI by 4.04% annually.
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