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VB vs. IWR: What’s The Difference?

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

The expense ratio of VB is 0.14 percentage points lower than IWR’s (0.05% vs. 0.19%). VB also has a lower exposure to the technology sector and a higher standard deviation. Overall, VB has provided higher returns than IWR over the past ten years.

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

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Summary

VBIWR
NameVanguard Small-Cap Index Fund ETF SharesiShares Russell Mid-Cap ETF
CategorySmall BlendMid-Cap Blend
IssuerVanguardiShares
AUM137.72B29.84B
Avg. Return14.25%14.15%
Div. Yield1.14%0.99%
Expense Ratio0.05%0.19%

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 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%.

VB’s dividend yield is 0.15% higher than that of IWR (1.14% vs. 0.99%). Also, VB yielded on average 0.10% more per year over the past decade (14.25% vs. 14.15%). The expense ratio of VB is 0.14 percentage points lower than IWR’s (0.05% vs. 0.19%).

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Fund Composition

Industry Exposure

VB vs. IWR - Industry Exposure

VBIWR
Technology16.85%19.67%
Industrials16.11%14.54%
Energy3.67%3.48%
Communication Services2.4%4.64%
Utilities2.19%4.46%
Healthcare14.34%11.76%
Consumer Defensive4.14%3.82%
Real Estate9.56%8.31%
Financial Services13.06%11.64%
Consumer Cyclical13.03%13.59%
Basic Materials4.63%4.1%

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 ETF (IWR) has the most exposure to the Technology sector at 19.67%. This is followed by Industrials and Consumer Cyclical at 14.54% and 13.59% respectively. Consumer Defensive (3.82%), Basic Materials (4.1%), and Utilities (4.46%) only make up 12.38% of the fund’s total assets.

IWR’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Healthcare, and Consumer Cyclical stocks at 4.64%, 8.31%, 11.64%, 11.76%, and 13.59%.

VB is 2.82% less exposed to the Technology sector than IWR (16.85% vs 19.67%). VB’s exposure to Industrials and Healthcare stocks is 1.57% higher and 2.58% higher respectively (16.11% vs. 14.54% and 14.34% vs. 11.76%). In total, Communication Services, Energy, and Consumer Defensive also make up 1.73% less of the fund’s holdings compared to IWR (10.21% vs. 11.94%).

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%.

IWR - Holdings

IWR HoldingsWeight
IDEXX Laboratories Inc0.51%
DocuSign Inc0.51%
Twitter Inc0.48%
Chipotle Mexican Grill Inc0.47%
Roku Inc Class A0.44%
Marvell Technology Inc0.44%
DexCom Inc0.44%
Trane Technologies PLC0.43%
MSCI Inc0.43%
Carrier Global Corp Ordinary Shares0.43%

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%.

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Risk Analysis

VBIWR
Mean Return1.151.17
R-squared85.0391.52
Std. Deviation17.8215.66
Alpha-4.02-2.8
Beta1.211.11
Sharpe Ratio0.740.86
Treynor Ratio10.1511.72

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

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

VB’s Mean Return is 0.02 points lower than that of IWR and its R-squared is 6.49 points lower. With a Standard Deviation of 17.82, VB is slightly more volatile than IWR. The Alpha and Beta of VB are 1.22 points lower and 0.10 points higher than IWR’s Alpha and Beta.

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Performance

Annual Returns

VB vs. IWR - Annual Returns

YearVBIWR
202019.08%16.91%
201927.37%30.31%
2018-9.3%-9.13%
201716.24%18.32%
201618.31%13.58%
2015-3.65%-2.57%
20147.51%13.03%
201337.8%34.5%
201218.22%17.13%
2011-2.68%-1.67%
201027.89%25.25%

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 IWR, returning 34.5% on an annual basis. The poorest year for IWR in the last ten years was 2018, with a yield of -9.13%. Most years the iShares Russell Mid-Cap ETF has given investors modest returns, such as in 2016, 2020, and 2012, when gains were 13.58%, 16.91%, and 17.13% respectively.

Portfolio Growth

VB vs. IWR - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VB$10,000$39,73414.25%
IWR$10,000$39,75114.15%

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 IWR, the end total would have been $39,751. This equates to a $29,751 profit over 11 years and a compound annual growth rate (CAGR) of 14.15%.

VB’s CAGR is 0.10 percentage points higher than that of IWR and as a result, would have yielded $17 less on a $10,000 investment. Thus, VB outperformed IWR by 0.10% annually.


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