The Vanguard Small-Cap Index Fund ETF Shares (VB) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and IWN is a iShares Small Value fund. So, what’s the difference between VB and IWN? And which fund is better?
The expense ratio of VB is 0.19 percentage points lower than IWN’s (0.05% vs. 0.24%). VB also has a higher exposure to the technology sector and a lower standard deviation. Overall, VB has provided higher returns than IWN over the past ten years.
In this article, we’ll compare VB vs. IWN. We’ll look at portfolio growth and performance, as well as at their annual returns and risk metrics. Moreover, I’ll also discuss VB’s and IWN’s fund composition, holdings, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Index Fund ETF Shares||iShares Russell 2000 Value ETF|
|Category||Small Blend||Small Value|
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 Russell 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.
VB’s dividend yield is 0.12% lower than that of IWN (1.14% vs. 1.26%). Also, VB yielded on average 3.29% more per year over the past decade (14.25% vs. 10.96%). The expense ratio of VB is 0.19 percentage points lower than IWN’s (0.05% vs. 0.24%).
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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 Russell 2000 Value ETF (IWN) has the most exposure to the Financial Services sector at 22.97%. This is followed by Industrials and Real Estate at 14.58% and 14.36% respectively. Communication Services (4.17%), Basic Materials (4.29%), and Utilities (4.69%) only make up 13.15% of the fund’s total assets.
IWN’s mid-section with moderate exposure is comprised of Energy, Technology, Consumer Cyclical, Healthcare, and Real Estate stocks at 5.84%, 6.02%, 8.39%, 10.94%, and 14.36%.
VB is 10.83% more exposed to the Technology sector than IWN (16.85% vs 6.02%). VB’s exposure to Industrials and Healthcare stocks is 1.53% higher and 3.40% higher respectively (16.11% vs. 14.58% and 14.34% vs. 10.94%). In total, Communication Services, Energy, and Consumer Defensive also make up 3.57% less of the fund’s holdings compared to IWN (10.21% vs. 13.78%).
|Charles River Laboratories International Inc||0.34%|
|Diamondback Energy Inc||0.31%|
|VICI Properties Inc Ordinary Shares||0.3%|
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%.
|AMC Entertainment Holdings Inc Class A||1.06%|
|Tenet Healthcare Corp||0.47%|
|Stag Industrial Inc||0.47%|
|EMCOR Group Inc||0.42%|
|Valley National Bancorp||0.37%|
|Chesapeake Energy Corp Ordinary Shares – New||0.37%|
|Agree Realty Corp||0.36%|
|Essent Group Ltd||0.35%|
IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.
Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.
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The Vanguard Small-Cap Index Fund ETF Shares (VB) has a R-squared of 85.03 with a Sharpe Ratio of 0.74 and a Alpha of -4.02. Its Standard Deviation is 17.82 while VB’s Treynor Ratio is 10.15. Furthermore, the fund has a Mean Return of 1.15 and a Beta of 1.21.
The iShares Russell 2000 Value ETF (IWN) has a Standard Deviation of 19.28 with a R-squared of 72.64 and a Alpha of -6.32. Its Beta is 1.21 while IWN’s Treynor Ratio is 8.3. Furthermore, the fund has a Mean Return of 1.01 and a Sharpe Ratio of 0.59.
VB’s Mean Return is 0.14 points higher than that of IWN and its R-squared is 12.39 points higher. With a Standard Deviation of 17.82, VB is slightly less volatile than IWN. The Alpha and Beta of VB are 2.30 points higher and 0.00 points lower than IWN’s Alpha and Beta.
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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 2013 was the strongest year for IWN, returning 34.3% on an annual basis. The poorest year for IWN in the last ten years was 2018, with a yield of -12.94%. Most years the iShares Russell 2000 Value ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 4.5%, 7.73%, and 17.92% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 IWN, the end total would have been $28,189. This equates to a $18,189 profit over 11 years and a compound annual growth rate (CAGR) of 10.96%.
VB’s CAGR is 3.29 percentage points higher than that of IWN and as a result, would have yielded $11,545 more on a $10,000 investment. Thus, VB outperformed IWN by 3.29% annually.
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