The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. VCIT is a Vanguard Corporate Bond fund and IWN is a iShares Small Value fund. So, what’s the difference between VCIT and IWN? And which fund is better?
The expense ratio of VCIT is 0.19 percentage points lower than IWN’s (0.05% vs. 0.24%). VCIT is mostly comprised of BBB bonds while IWN has a high exposure to the financial services sector. Overall, VCIT has provided lower returns than IWN over the past ten years.
In this article, we’ll compare VCIT vs. IWN. We’ll look at fund composition and annual returns, as well as at their industry exposure and holdings. Moreover, I’ll also discuss VCIT’s and IWN’s portfolio growth, risk metrics, and performance and examine how these affect their overall returns.
|Name||Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares||iShares Russell 2000 Value ETF|
|Category||Corporate Bond||Small Value|
The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) is a Corporate Bond fund that is issued by Vanguard. It currently has 48.39B total assets under management and has yielded an average annual return of 5.84% over the past 10 years. The fund has a dividend yield of 2.33% with an expense ratio of 0.05%.
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%.
VCIT’s dividend yield is 1.07% higher than that of IWN (2.33% vs. 1.26%). Also, VCIT yielded on average 5.12% less per year over the past decade (5.84% vs. 10.96%). The expense ratio of VCIT is 0.19 percentage points lower than IWN’s (0.05% vs. 0.24%).
|VCIT Bond Sectors||Weight|
VCIT’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and Below B at 55.28%, 37.85%, 5.22%, 1.57%, and 0.08%. The fund is less weighted towards Others (0.0%), B (0.0%), and BB (0.0%) rated bonds.
|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 Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a Mean Return of 0.44 with a Alpha of 0.89 and a Treynor Ratio of 3.43. Its Beta is 1.35 while VCIT’s R-squared is 63.18. Furthermore, the fund has a Standard Deviation of 5.08 and a Sharpe Ratio of 0.91.
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 Mean Return is 1.01 while IWN’s Beta is 1.21. Furthermore, the fund has a Sharpe Ratio of 0.59 and a Treynor Ratio of 8.3.
VCIT’s Mean Return is 0.57 points lower than that of IWN and its R-squared is 9.46 points lower. With a Standard Deviation of 5.08, VCIT is slightly less volatile than IWN. The Alpha and Beta of VCIT are 7.21 points higher and 0.14 points higher than IWN’s Alpha and Beta.
VCIT had its best year in 2019 with an annual return of 13.97%. VCIT’s worst year over the past decade yielded -1.8% and occurred in 2013. In most years the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares provided moderate returns such as in 2017, 2014, and 2011 where annual returns amounted to 5.5%, 7.47%, and 7.94% 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 VCIT would have resulted in a final balance of $17,439. This is a profit of $7,439 over 10 years and amounts to a compound annual growth rate (CAGR) of 5.84%.
With a $10,000 investment in IWN, the end total would have been $22,680. This equates to a $12,680 profit over 10 years and a compound annual growth rate (CAGR) of 10.96%.
VCIT’s CAGR is 5.12 percentage points lower than that of IWN and as a result, would have yielded $5,241 less on a $10,000 investment. Thus, VCIT performed worse than IWN by 5.12% annually.
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