VBK vs. IWN: What’s The Difference?

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. VBK is a Vanguard Small Growth fund and IWN is a iShares Small Value fund. So, what’s the difference between VBK and IWN? And which fund is better?

The expense ratio of VBK is 0.17 percentage points lower than IWN’s (0.07% vs. 0.24%). VBK also has a higher exposure to the technology sector and a lower standard deviation. Overall, VBK has provided higher returns than IWN over the past 11 years.

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

Summary

VBK IWN
Name Vanguard Small-Cap Growth Index Fund ETF Shares iShares Russell 2000 Value ETF
Category Small Growth Small Value
Issuer Vanguard iShares
AUM 37.89B 15.48B
Avg. Return 16.53% 10.96%
Div. Yield 0.45% 1.26%
Expense Ratio 0.07% 0.24%

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.

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%.

VBK’s dividend yield is 0.81% lower than that of IWN (0.45% vs. 1.26%). Also, VBK yielded on average 5.57% more per year over the past decade (16.53% vs. 10.96%). The expense ratio of VBK is 0.17 percentage points lower than IWN’s (0.07% vs. 0.24%).

Fund Composition

Industry Exposure

VBK vs. IWN - Industry Exposure

VBK IWN
Technology 27.87% 6.02%
Industrials 13.19% 14.58%
Energy 1.77% 5.84%
Communication Services 3.24% 4.17%
Utilities 0.32% 4.69%
Healthcare 23.24% 10.94%
Consumer Defensive 3.83% 3.77%
Real Estate 7.87% 14.36%
Financial Services 4.05% 22.97%
Consumer Cyclical 12.13% 8.39%
Basic Materials 2.49% 4.29%

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.

VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.

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%.

VBK is 21.85% more exposed to the Technology sector than IWN (27.87% vs 6.02%). VBK’s exposure to Healthcare and Industrials stocks is 12.30% higher and 1.39% lower respectively (23.24% vs. 10.94% and 13.19% vs. 14.58%). In total, Energy, Basic Materials, and Communication Services also make up 6.80% less of the fund’s holdings compared to IWN (7.50% vs. 14.30%).

Holdings

VBK - Holdings

VBK Holdings Weight
Charles River Laboratories International Inc 0.78%
Pool Corp 0.73%
Bio-Techne Corp 0.73%
Avantor Inc 0.73%
PerkinElmer Inc 0.72%
Entegris Inc 0.7%
PTC Inc 0.62%
Fair Isaac Corp 0.57%
Bill.com Holdings Inc Ordinary Shares 0.56%
Avalara Inc 0.55%

VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.

Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.

IWN - Holdings

IWN Holdings Weight
AMC Entertainment Holdings Inc Class A 1.06%
Tenet Healthcare Corp 0.47%
Stag Industrial Inc 0.47%
Ovintiv Inc 0.45%
EMCOR Group Inc 0.42%
Valley National Bancorp 0.37%
Chesapeake Energy Corp Ordinary Shares – New 0.37%
Agree Realty Corp 0.36%
Macy’s Inc 0.35%
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%.

Risk Analysis

VBK IWN
Mean Return 1.22 1.01
R-squared 80.56 72.64
Std. Deviation 17.95 19.28
Alpha -2.81 -6.32
Beta 1.18 1.21
Sharpe Ratio 0.78 0.59
Treynor Ratio 11.18 8.3

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Mean Return of 1.22 with a Standard Deviation of 17.95 and a Sharpe Ratio of 0.78. Its R-squared is 80.56 while VBK’s Alpha is -2.81. Furthermore, the fund has a Treynor Ratio of 11.18 and a Beta of 1.18.

The iShares Russell 2000 Value ETF (IWN) has a Sharpe Ratio of 0.59 with a Alpha of -6.32 and a R-squared of 72.64. Its Beta is 1.21 while IWN’s Mean Return is 1.01. Furthermore, the fund has a Standard Deviation of 19.28 and a Treynor Ratio of 8.3.

VBK’s Mean Return is 0.21 points higher than that of IWN and its R-squared is 7.92 points higher. With a Standard Deviation of 17.95, VBK is slightly less volatile than IWN. The Alpha and Beta of VBK are 3.51 points higher and 0.03 points lower than IWN’s Alpha and Beta.

Performance

Annual Returns

VBK vs. IWN - Annual Returns

Year VBK IWN
2020 35.29% 4.5%
2019 32.75% 22.17%
2018 -5.68% -12.94%
2017 21.9% 7.73%
2016 10.74% 31.64%
2015 -2.51% -7.53%
2014 4.02% 4.13%
2013 38.18% 34.3%
2012 17.67% 17.92%
2011 -1.43% -5.64%
2010 30.87% 24.29%

VBK had its best year in 2013 with an annual return of 38.18%. VBK’s worst year over the past decade yielded -5.68% and occurred in 2018. In most years the Vanguard Small-Cap Growth Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2017 where annual returns amounted to 10.74%, 17.67%, and 21.9% 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.

Portfolio Growth

VBK vs. IWN - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VBK $10,000 $48,639 16.53%
IWN $10,000 $28,189 10.96%

A $10,000 investment in VBK would have resulted in a final balance of $48,639. This is a profit of $38,639 over 11 years and amounts to a compound annual growth rate (CAGR) of 16.53%.

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%.

VBK’s CAGR is 5.57 percentage points higher than that of IWN and as a result, would have yielded $20,450 more on a $10,000 investment. Thus, VBK outperformed IWN by 5.57% annually.


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