The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) and the iShares Russell Mid-Cap Growth ETF (IWP) are both among the Top 100 ETFs. VBK is a Vanguard Small Growth fund and IWP is a iShares Mid-Cap Growth fund. So, what’s the difference between VBK and IWP? And which fund is better?
The expense ratio of VBK is 0.17 percentage points lower than IWP’s (0.07% vs. 0.24%). VBK also has a lower exposure to the technology sector and a higher standard deviation. Overall, VBK has provided lower returns than IWP over the past 11 years.
In this article, we’ll compare VBK vs. IWP. We’ll look at annual returns and holdings, as well as at their portfolio growth and performance. Moreover, I’ll also discuss VBK’s and IWP’s industry exposure, risk metrics, and fund composition and examine how these affect their overall returns.
Summary
| VBK | IWP | |
| Name | Vanguard Small-Cap Growth Index Fund ETF Shares | iShares Russell Mid-Cap Growth ETF |
| Category | Small Growth | Mid-Cap Growth |
| Issuer | Vanguard | iShares |
| AUM | 37.89B | 15.7B |
| Avg. Return | 16.53% | 16.75% |
| Div. Yield | 0.45% | 0.26% |
| 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 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%.
VBK’s dividend yield is 0.19% higher than that of IWP (0.45% vs. 0.26%). Also, VBK yielded on average 0.22% less per year over the past decade (16.53% vs. 16.75%). The expense ratio of VBK is 0.17 percentage points lower than IWP’s (0.07% vs. 0.24%).
Fund Composition
Industry Exposure
| VBK | IWP | |
| Technology | 27.87% | 33.88% |
| Industrials | 13.19% | 14.09% |
| Energy | 1.77% | 1.51% |
| Communication Services | 3.24% | 6.32% |
| Utilities | 0.32% | 0.16% |
| Healthcare | 23.24% | 16.79% |
| Consumer Defensive | 3.83% | 2.32% |
| Real Estate | 7.87% | 2.46% |
| Financial Services | 4.05% | 4.52% |
| Consumer Cyclical | 12.13% | 16.09% |
| Basic Materials | 2.49% | 1.86% |
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 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%.
VBK is 6.01% less exposed to the Technology sector than IWP (27.87% vs 33.88%). VBK’s exposure to Healthcare and Industrials stocks is 6.45% higher and 0.90% lower respectively (23.24% vs. 16.79% and 13.19% vs. 14.09%). In total, Energy, Basic Materials, and Communication Services also make up 2.19% less of the fund’s holdings compared to IWP (7.50% vs. 9.69%).
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%.
| 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
| VBK | IWP | |
| Mean Return | 1.22 | 1.27 |
| R-squared | 80.56 | 87.01 |
| Std. Deviation | 17.95 | 16.05 |
| Alpha | -2.81 | -1.03 |
| Beta | 1.18 | 1.1 |
| Sharpe Ratio | 0.78 | 0.91 |
| Treynor Ratio | 11.18 | 12.98 |
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Sharpe Ratio of 0.78 with a Beta of 1.18 and a Alpha of -2.81. Its Mean Return is 1.22 while VBK’s Standard Deviation is 17.95. Furthermore, the fund has a Treynor Ratio of 11.18 and a R-squared of 80.56.
The iShares Russell Mid-Cap Growth ETF (IWP) has a Sharpe Ratio of 0.91 with a Standard Deviation of 16.05 and a Alpha of -1.03. Its Mean Return is 1.27 while IWP’s R-squared is 87.01. Furthermore, the fund has a Beta of 1.1 and a Treynor Ratio of 12.98.
VBK’s Mean Return is 0.05 points lower than that of IWP and its R-squared is 6.45 points lower. With a Standard Deviation of 17.95, VBK is slightly more volatile than IWP. The Alpha and Beta of VBK are 1.78 points lower and 0.08 points higher than IWP’s Alpha and Beta.
Performance
Annual Returns
| Year | VBK | IWP |
| 2020 | 35.29% | 35.29% |
| 2019 | 32.75% | 35.14% |
| 2018 | -5.68% | -4.95% |
| 2017 | 21.9% | 24.98% |
| 2016 | 10.74% | 7.15% |
| 2015 | -2.51% | -0.39% |
| 2014 | 4.02% | 11.68% |
| 2013 | 38.18% | 35.44% |
| 2012 | 17.67% | 15.62% |
| 2011 | -1.43% | -1.82% |
| 2010 | 30.87% | 26.1% |
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 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 |
| VBK | $10,000 | $48,639 | 16.53% |
| IWP | $10,000 | $50,191 | 16.75% |
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 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%.
VBK’s CAGR is 0.22 percentage points lower than that of IWP and as a result, would have yielded $1,552 less on a $10,000 investment. Thus, VBK performed worse than IWP by 0.22% annually.
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