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VB vs. IVW: What’s The Difference?

The Vanguard Small-Cap Index Fund ETF Shares (VB) and the iShares S&P 500 Growth ETF (IVW) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and IVW is a iShares Large Growth fund. So, what’s the difference between VB and IVW? And which fund is better?

The expense ratio of VB is 0.13 percentage points lower than IVW’s (0.05% vs. 0.18%). VB also has a lower exposure to the technology sector and a higher standard deviation. Overall, VB has provided lower returns than IVW over the past ten years.

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

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Summary

VBIVW
NameVanguard Small-Cap Index Fund ETF SharesiShares S&P 500 Growth ETF
CategorySmall BlendLarge Growth
IssuerVanguardiShares
AUM137.72B35.72B
Avg. Return14.25%16.74%
Div. Yield1.14%0.61%
Expense Ratio0.05%0.18%

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 S&P 500 Growth ETF (IVW) is a Large Growth fund that is issued by iShares. It currently has 35.72B total assets under management and has yielded an average annual return of 16.74% over the past 10 years. The fund has a dividend yield of 0.61% with an expense ratio of 0.18%.

VB’s dividend yield is 0.53% higher than that of IVW (1.14% vs. 0.61%). Also, VB yielded on average 2.48% less per year over the past decade (14.25% vs. 16.74%). The expense ratio of VB is 0.13 percentage points lower than IVW’s (0.05% vs. 0.18%).

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Fund Composition

Industry Exposure

VB vs. IVW - Industry Exposure

VBIVW
Technology16.85%37.8%
Industrials16.11%5.72%
Energy3.67%0.06%
Communication Services2.4%15.44%
Utilities2.19%0.47%
Healthcare14.34%11.88%
Consumer Defensive4.14%3.84%
Real Estate9.56%1.11%
Financial Services13.06%6.78%
Consumer Cyclical13.03%15.25%
Basic Materials4.63%1.65%

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 S&P 500 Growth ETF (IVW) has the most exposure to the Technology sector at 37.8%. This is followed by Communication Services and Consumer Cyclical at 15.44% and 15.25% respectively. Utilities (0.47%), Real Estate (1.11%), and Basic Materials (1.65%) only make up 3.23% of the fund’s total assets.

IVW’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 3.84%, 5.72%, 6.78%, 11.88%, and 15.25%.

VB is 20.95% less exposed to the Technology sector than IVW (16.85% vs 37.8%). VB’s exposure to Industrials and Healthcare stocks is 10.39% higher and 2.46% higher respectively (16.11% vs. 5.72% and 14.34% vs. 11.88%). In total, Communication Services, Energy, and Consumer Defensive also make up 9.13% less of the fund’s holdings compared to IVW (10.21% vs. 19.34%).

Holdings

VB - Holdings

VB HoldingsWeight
Charles River Laboratories International Inc0.34%
Pool Corp0.32%
Bio-Techne Corp0.32%
Avantor Inc0.32%
PerkinElmer Inc0.31%
Diamondback Energy Inc0.31%
VICI Properties Inc Ordinary Shares0.3%
IDEX Corp0.3%
Entegris Inc0.3%
Novavax Inc0.29%

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%.

IVW - Holdings

IVW HoldingsWeight
Apple Inc11.46%
Microsoft Corp10.75%
Amazon.com Inc7.14%
Facebook Inc Class A4.28%
Alphabet Inc Class A4.06%
Alphabet Inc Class C3.86%
Tesla Inc2.65%
NVIDIA Corp2.43%
PayPal Holdings Inc1.62%
Adobe Inc1.49%

IVW’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 11.46%, 10.75%, 7.14%, 4.28%, and 4.06%.

Alphabet Inc Class C (3.86%), Tesla Inc (2.65%), and NVIDIA Corp (2.43%) have a slightly smaller but still significant weight. PayPal Holdings Inc and Adobe Inc are also represented in the IVW’s holdings at 1.62% and 1.49%.

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Risk Analysis

VBIVW
Mean Return1.151.44
R-squared85.0393.82
Std. Deviation17.8213.77
Alpha-4.022.19
Beta1.210.98
Sharpe Ratio0.741.21
Treynor Ratio10.1517.24

The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Beta of 1.21 with a Treynor Ratio of 10.15 and a Sharpe Ratio of 0.74. Its R-squared is 85.03 while VB’s Alpha is -4.02. Furthermore, the fund has a Mean Return of 1.15 and a Standard Deviation of 17.82.

The iShares S&P 500 Growth ETF (IVW) has a Sharpe Ratio of 1.21 with a R-squared of 93.82 and a Mean Return of 1.44. Its Standard Deviation is 13.77 while IVW’s Alpha is 2.19. Furthermore, the fund has a Treynor Ratio of 17.24 and a Beta of 0.98.

VB’s Mean Return is 0.29 points lower than that of IVW and its R-squared is 8.79 points lower. With a Standard Deviation of 17.82, VB is slightly more volatile than IVW. The Alpha and Beta of VB are 6.21 points lower and 0.23 points higher than IVW’s Alpha and Beta.

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Performance

Annual Returns

VB vs. IVW - Annual Returns

YearVBIVW
202019.08%33.21%
201927.37%30.91%
2018-9.3%-0.17%
201716.24%27.2%
201618.31%6.74%
2015-3.65%5.33%
20147.51%14.67%
201337.8%32.48%
201218.22%14.39%
2011-2.68%4.49%
201027.89%14.84%

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 2020 was the strongest year for IVW, returning 33.21% on an annual basis. The poorest year for IVW in the last ten years was 2018, with a yield of -0.17%. Most years the iShares S&P 500 Growth ETF has given investors modest returns, such as in 2012, 2014, and 2010, when gains were 14.39%, 14.67%, and 14.84% respectively.

Portfolio Growth

VB vs. IVW - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VB$10,000$39,73414.25%
IVW$10,000$51,91516.74%

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 IVW, the end total would have been $51,915. This equates to a $41,915 profit over 11 years and a compound annual growth rate (CAGR) of 16.74%.

VB’s CAGR is 2.48 percentage points lower than that of IVW and as a result, would have yielded $12,181 less on a $10,000 investment. Thus, VB performed worse than IVW by 2.48% annually.


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