The Vanguard Small-Cap Index Fund ETF Shares (VB) and the iShares Russell Mid-Cap Value ETF (IWS) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and IWS is a iShares Mid-Cap Value fund. So, what’s the difference between VB and IWS? And which fund is better?
The expense ratio of VB is 0.18 percentage points lower than IWS’s (0.05% vs. 0.23%). VB also has a higher exposure to the technology sector and a higher standard deviation. Overall, VB has provided higher returns than IWS over the past ten years.
In this article, we’ll compare VB vs. IWS. We’ll look at risk metrics and performance, as well as at their annual returns and fund composition. Moreover, I’ll also discuss VB’s and IWS’s portfolio growth, holdings, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Index Fund ETF Shares||iShares Russell Mid-Cap Value ETF|
|Category||Small Blend||Mid-Cap 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 Mid-Cap Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.
VB’s dividend yield is 0.20% lower than that of IWS (1.14% vs. 1.34%). Also, VB yielded on average 1.91% more per year over the past decade (14.25% vs. 12.35%). The expense ratio of VB is 0.18 percentage points lower than IWS’s (0.05% vs. 0.23%).
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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 Mid-Cap Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.
IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.
VB is 5.46% more exposed to the Technology sector than IWS (16.85% vs 11.39%). VB’s exposure to Industrials and Healthcare stocks is 1.51% higher and 5.78% higher respectively (16.11% vs. 14.6% and 14.34% vs. 8.56%). In total, Communication Services, Energy, and Consumer Defensive also make up 3.34% less of the fund’s holdings compared to IWS (10.21% vs. 13.55%).
|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%.
|Marvell Technology Inc||0.69%|
|IHS Markit Ltd||0.62%|
|Prudential Financial Inc||0.56%|
|Otis Worldwide Corp Ordinary Shares||0.54%|
|International Flavors & Fragrances Inc||0.53%|
|Xcel Energy Inc||0.52%|
|Motorola Solutions Inc||0.52%|
IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.
International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.
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The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Mean Return of 1.15 with a Beta of 1.21 and a Standard Deviation of 17.82. Its Alpha is -4.02 while VB’s Treynor Ratio is 10.15. Furthermore, the fund has a Sharpe Ratio of 0.74 and a R-squared of 85.03.
The iShares Russell Mid-Cap Value ETF (IWS) has a R-squared of 87.04 with a Mean Return of 1.06 and a Standard Deviation of 16.03. Its Sharpe Ratio is 0.75 while IWS’s Beta is 1.1. Furthermore, the fund has a Alpha of -4.11 and a Treynor Ratio of 10.3.
VB’s Mean Return is 0.09 points higher than that of IWS and its R-squared is 2.01 points lower. With a Standard Deviation of 17.82, VB is slightly more volatile than IWS. The Alpha and Beta of VB are 0.09 points higher and 0.11 points higher than IWS’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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% 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 IWS, the end total would have been $33,083. This equates to a $23,083 profit over 11 years and a compound annual growth rate (CAGR) of 12.35%.
VB’s CAGR is 1.91 percentage points higher than that of IWS and as a result, would have yielded $6,651 more on a $10,000 investment. Thus, VB outperformed IWS by 1.91% annually.
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