The Vanguard Small-Cap Index Fund ETF Shares (VB) and the iShares Russell Mid-Cap Growth ETF (IWP) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and IWP is a iShares Mid-Cap Growth fund. So, what’s the difference between VB and IWP? And which fund is better?
The expense ratio of VB is 0.19 percentage points lower than IWP’s (0.05% vs. 0.24%). VB also has a lower exposure to the technology sector and a higher standard deviation. Overall, VB has provided lower returns than IWP over the past ten years.
In this article, we’ll compare VB vs. IWP. We’ll look at industry exposure and fund composition, as well as at their portfolio growth and risk metrics. Moreover, I’ll also discuss VB’s and IWP’s performance, holdings, and annual returns and examine how these affect their overall returns.
Summary
| VB | IWP | |
| Name | Vanguard Small-Cap Index Fund ETF Shares | iShares Russell Mid-Cap Growth ETF |
| Category | Small Blend | Mid-Cap Growth |
| Issuer | Vanguard | iShares |
| AUM | 137.72B | 15.7B |
| Avg. Return | 14.25% | 16.75% |
| Div. Yield | 1.14% | 0.26% |
| Expense Ratio | 0.05% | 0.24% |
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 Mid-Cap Growth ETF (IWP) is a Mid-Cap Growth fund that is issued by iShares. It currently has 15.7B total assets under management and has yielded an average annual return of 16.75% over the past 10 years. The fund has a dividend yield of 0.26% with an expense ratio of 0.24%.
VB’s dividend yield is 0.88% higher than that of IWP (1.14% vs. 0.26%). Also, VB yielded on average 2.50% less per year over the past decade (14.25% vs. 16.75%). The expense ratio of VB is 0.19 percentage points lower than IWP’s (0.05% vs. 0.24%).
Fund Composition
Industry Exposure
| VB | IWP | |
| Technology | 16.85% | 33.88% |
| Industrials | 16.11% | 14.09% |
| Energy | 3.67% | 1.51% |
| Communication Services | 2.4% | 6.32% |
| Utilities | 2.19% | 0.16% |
| Healthcare | 14.34% | 16.79% |
| Consumer Defensive | 4.14% | 2.32% |
| Real Estate | 9.56% | 2.46% |
| Financial Services | 13.06% | 4.52% |
| Consumer Cyclical | 13.03% | 16.09% |
| Basic Materials | 4.63% | 1.86% |
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 Mid-Cap Growth ETF (IWP) has the most exposure to the Technology sector at 33.88%. This is followed by Healthcare and Consumer Cyclical at 16.79% and 16.09% respectively. Energy (1.51%), Basic Materials (1.86%), and Consumer Defensive (2.32%) only make up 5.69% of the fund’s total assets.
IWP’s mid-section with moderate exposure is comprised of Real Estate, Financial Services, Communication Services, Industrials, and Consumer Cyclical stocks at 2.46%, 4.52%, 6.32%, 14.09%, and 16.09%.
VB is 17.03% less exposed to the Technology sector than IWP (16.85% vs 33.88%). VB’s exposure to Industrials and Healthcare stocks is 2.02% higher and 2.45% lower respectively (16.11% vs. 14.09% and 14.34% vs. 16.79%). In total, Communication Services, Energy, and Consumer Defensive also make up 0.06% more of the fund’s holdings compared to IWP (10.21% vs. 10.15%).
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%.
| IWP Holdings | Weight |
| IDEXX Laboratories Inc | 1.3% |
| DocuSign Inc | 1.3% |
| Roku Inc Class A | 1.29% |
| Match Group Inc | 1.06% |
| Chipotle Mexican Grill Inc | 1.06% |
| Pinterest Inc | 1.05% |
| Veeva Systems Inc Class A | 1.04% |
| Palantir Technologies Inc Ordinary Shares – Class A | 1.04% |
| Lululemon Athletica Inc | 1.01% |
| DexCom Inc | 1.0% |
IWP’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Roku Inc Class A, Match Group Inc, and Chipotle Mexican Grill Inc at 1.3%, 1.3%, 1.29%, 1.06%, and 1.06%.
Pinterest Inc (1.05%), Veeva Systems Inc Class A (1.04%), and Palantir Technologies Inc Ordinary Shares – Class A (1.04%) have a slightly smaller but still significant weight. Lululemon Athletica Inc and DexCom Inc are also represented in the IWP’s holdings at 1.01% and 1.0%.
Risk Analysis
| VB | IWP | |
| Mean Return | 1.15 | 1.27 |
| R-squared | 85.03 | 87.01 |
| Std. Deviation | 17.82 | 16.05 |
| Alpha | -4.02 | -1.03 |
| Beta | 1.21 | 1.1 |
| Sharpe Ratio | 0.74 | 0.91 |
| Treynor Ratio | 10.15 | 12.98 |
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a R-squared of 85.03 with a Beta of 1.21 and a Standard Deviation of 17.82. Its Alpha is -4.02 while VB’s Mean Return is 1.15. Furthermore, the fund has a Treynor Ratio of 10.15 and a Sharpe Ratio of 0.74.
The iShares Russell Mid-Cap Growth ETF (IWP) has a R-squared of 87.01 with a Standard Deviation of 16.05 and a Sharpe Ratio of 0.91. Its Beta is 1.1 while IWP’s Treynor Ratio is 12.98. Furthermore, the fund has a Alpha of -1.03 and a Mean Return of 1.27.
VB’s Mean Return is 0.12 points lower than that of IWP and its R-squared is 1.98 points lower. With a Standard Deviation of 17.82, VB is slightly more volatile than IWP. The Alpha and Beta of VB are 2.99 points lower and 0.11 points higher than IWP’s Alpha and Beta.
Performance
Annual Returns
| Year | VB | IWP |
| 2020 | 19.08% | 35.29% |
| 2019 | 27.37% | 35.14% |
| 2018 | -9.3% | -4.95% |
| 2017 | 16.24% | 24.98% |
| 2016 | 18.31% | 7.15% |
| 2015 | -3.65% | -0.39% |
| 2014 | 7.51% | 11.68% |
| 2013 | 37.8% | 35.44% |
| 2012 | 18.22% | 15.62% |
| 2011 | -2.68% | -1.82% |
| 2010 | 27.89% | 26.1% |
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 IWP, returning 35.44% on an annual basis. The poorest year for IWP in the last ten years was 2018, with a yield of -4.95%. Most years the iShares Russell Mid-Cap Growth ETF has given investors modest returns, such as in 2014, 2012, and 2017, when gains were 11.68%, 15.62%, and 24.98% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VB | $10,000 | $39,734 | 14.25% |
| IWP | $10,000 | $50,191 | 16.75% |
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 IWP, the end total would have been $50,191. This equates to a $40,191 profit over 11 years and a compound annual growth rate (CAGR) of 16.75%.
VB’s CAGR is 2.50 percentage points lower than that of IWP and as a result, would have yielded $10,457 less on a $10,000 investment. Thus, VB performed worse than IWP by 2.50% annually.
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