The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) and the iShares Russell Mid-Cap Growth ETF (IWP) are both among the Top 100 ETFs. VBR is a Vanguard Small Value fund and IWP is a iShares Mid-Cap Growth fund. So, what’s the difference between VBR and IWP? And which fund is better?
The expense ratio of VBR is 0.17 percentage points lower than IWP’s (0.07% vs. 0.24%). VBR also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VBR has provided lower returns than IWP over the past 11 years.
In this article, we’ll compare VBR vs. IWP. We’ll look at fund composition and risk metrics, as well as at their industry exposure and annual returns. Moreover, I’ll also discuss VBR’s and IWP’s portfolio growth, holdings, and performance and examine how these affect their overall returns.
Summary
| VBR | IWP | |
| Name | Vanguard Small-Cap Value Index Fund ETF Shares | iShares Russell Mid-Cap Growth ETF |
| Category | Small Value | Mid-Cap Growth |
| Issuer | Vanguard | iShares |
| AUM | 48.08B | 15.7B |
| Avg. Return | 12.28% | 16.75% |
| Div. Yield | 1.6% | 0.26% |
| Expense Ratio | 0.07% | 0.24% |
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 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%.
VBR’s dividend yield is 1.34% higher than that of IWP (1.6% vs. 0.26%). Also, VBR yielded on average 4.47% less per year over the past decade (12.28% vs. 16.75%). The expense ratio of VBR is 0.17 percentage points lower than IWP’s (0.07% vs. 0.24%).
Fund Composition
Industry Exposure
| VBR | IWP | |
| Technology | 8.39% | 33.88% |
| Industrials | 18.44% | 14.09% |
| Energy | 5.15% | 1.51% |
| Communication Services | 1.77% | 6.32% |
| Utilities | 3.65% | 0.16% |
| Healthcare | 7.16% | 16.79% |
| Consumer Defensive | 4.36% | 2.32% |
| Real Estate | 10.92% | 2.46% |
| Financial Services | 20.04% | 4.52% |
| Consumer Cyclical | 13.82% | 16.09% |
| Basic Materials | 6.31% | 1.86% |
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 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%.
VBR is 15.52% more exposed to the Financial Services sector than IWP (20.04% vs 4.52%). VBR’s exposure to Industrials and Consumer Cyclical stocks is 4.35% higher and 2.27% lower respectively (18.44% vs. 14.09% and 13.82% vs. 16.09%). In total, Utilities, Consumer Defensive, and Energy also make up 9.17% more of the fund’s holdings compared to IWP (13.16% vs. 3.99%).
Holdings
| VBR Holdings | Weight |
| Diamondback Energy Inc | 0.55% |
| VICI Properties Inc Ordinary Shares | 0.54% |
| IDEX Corp | 0.54% |
| Nuance Communications Inc | 0.5% |
| Molina Healthcare Inc | 0.48% |
| Signature Bank | 0.46% |
| Novavax Inc | 0.44% |
| 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%.
| 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
| VBR | IWP | |
| Mean Return | 1.08 | 1.27 |
| R-squared | 82.2 | 87.01 |
| Std. Deviation | 18.37 | 16.05 |
| Alpha | -5.09 | -1.03 |
| Beta | 1.23 | 1.1 |
| Sharpe Ratio | 0.67 | 0.91 |
| Treynor Ratio | 9.15 | 12.98 |
The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Mean Return of 1.08 with a Treynor Ratio of 9.15 and a Beta of 1.23. Its Alpha is -5.09 while VBR’s R-squared is 82.2. Furthermore, the fund has a Sharpe Ratio of 0.67 and a Standard Deviation of 18.37.
The iShares Russell Mid-Cap Growth ETF (IWP) has a Mean Return of 1.27 with a Sharpe Ratio of 0.91 and a R-squared of 87.01. Its Beta is 1.1 while IWP’s Alpha is -1.03. Furthermore, the fund has a Treynor Ratio of 12.98 and a Standard Deviation of 16.05.
VBR’s Mean Return is 0.19 points lower than that of IWP and its R-squared is 4.81 points lower. With a Standard Deviation of 18.37, VBR is slightly more volatile than IWP. The Alpha and Beta of VBR are 4.06 points lower and 0.13 points higher than IWP’s Alpha and Beta.
Performance
Annual Returns
| Year | VBR | IWP |
| 2020 | 5.82% | 35.29% |
| 2019 | 22.76% | 35.14% |
| 2018 | -12.22% | -4.95% |
| 2017 | 11.79% | 24.98% |
| 2016 | 24.8% | 7.15% |
| 2015 | -4.67% | -0.39% |
| 2014 | 10.55% | 11.68% |
| 2013 | 36.57% | 35.44% |
| 2012 | 18.78% | 15.62% |
| 2011 | -4.05% | -1.82% |
| 2010 | 24.97% | 26.1% |
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 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 |
| VBR | $10,000 | $32,611 | 12.28% |
| IWP | $10,000 | $50,191 | 16.75% |
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 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%.
VBR’s CAGR is 4.47 percentage points lower than that of IWP and as a result, would have yielded $17,580 less on a $10,000 investment. Thus, VBR performed worse than IWP by 4.47% annually.
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