The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. VBR is a Vanguard Small Value fund and IWN is a iShares Small Value fund. So, what’s the difference between VBR and IWN? And which fund is better?
The expense ratio of VBR is 0.17 percentage points lower than IWN’s (0.07% vs. 0.24%). VBR also has a lower exposure to the financial services sector and a lower standard deviation. Overall, VBR has provided higher returns than IWN over the past 11 years.
In this article, we’ll compare VBR vs. IWN. We’ll look at risk metrics and industry exposure, as well as at their portfolio growth and holdings. Moreover, I’ll also discuss VBR’s and IWN’s annual returns, fund composition, and performance and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Value Index Fund ETF Shares||iShares Russell 2000 Value ETF|
|Category||Small Value||Small Value|
The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% 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%.
VBR’s dividend yield is 0.34% higher than that of IWN (1.6% vs. 1.26%). Also, VBR yielded on average 1.32% more per year over the past decade (12.28% vs. 10.96%). The expense ratio of VBR is 0.17 percentage points lower than IWN’s (0.07% vs. 0.24%).
The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.
VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.
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%.
VBR is 2.93% less exposed to the Financial Services sector than IWN (20.04% vs 22.97%). VBR’s exposure to Industrials and Consumer Cyclical stocks is 3.86% higher and 5.43% higher respectively (18.44% vs. 14.58% and 13.82% vs. 8.39%). In total, Utilities, Consumer Defensive, and Energy also make up 1.14% less of the fund’s holdings compared to IWN (13.16% vs. 14.30%).
|Diamondback Energy Inc||0.55%|
|VICI Properties Inc Ordinary Shares||0.54%|
|Nuance Communications Inc||0.5%|
|Molina Healthcare Inc||0.48%|
|Howmet Aerospace Inc||0.44%|
|Apollo Global Management Inc Class A||0.42%|
|Brown & Brown Inc||0.41%|
VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.
Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.
|AMC Entertainment Holdings Inc Class A||1.06%|
|Tenet Healthcare Corp||0.47%|
|Stag Industrial Inc||0.47%|
|EMCOR Group Inc||0.42%|
|Valley National Bancorp||0.37%|
|Chesapeake Energy Corp Ordinary Shares – New||0.37%|
|Agree Realty Corp||0.36%|
|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%.
The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Beta of 1.23 with a Standard Deviation of 18.37 and a Mean Return of 1.08. Its Alpha is -5.09 while VBR’s Sharpe Ratio is 0.67. Furthermore, the fund has a R-squared of 82.2 and a Treynor Ratio of 9.15.
The iShares Russell 2000 Value ETF (IWN) has a Standard Deviation of 19.28 with a Alpha of -6.32 and a R-squared of 72.64. Its Sharpe Ratio is 0.59 while IWN’s Beta is 1.21. Furthermore, the fund has a Mean Return of 1.01 and a Treynor Ratio of 8.3.
VBR’s Mean Return is 0.07 points higher than that of IWN and its R-squared is 9.56 points higher. With a Standard Deviation of 18.37, VBR is slightly less volatile than IWN. The Alpha and Beta of VBR are 1.23 points higher and 0.02 points higher than IWN’s Alpha and Beta.
VBR had its best year in 2013 with an annual return of 36.57%. VBR’s worst year over the past decade yielded -12.22% and occurred in 2018. In most years the Vanguard Small-Cap Value Index Fund ETF Shares provided moderate returns such as in 2014, 2017, and 2012 where annual returns amounted to 10.55%, 11.79%, and 18.78% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VBR would have resulted in a final balance of $32,611. This is a profit of $22,611 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.28%.
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%.
VBR’s CAGR is 1.32 percentage points higher than that of IWN and as a result, would have yielded $4,422 more on a $10,000 investment. Thus, VBR outperformed IWN by 1.32% annually.
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