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

The expense ratio of VGK is 0.16 percentage points lower than IWN’s (0.08% vs. 0.24%). VGK also has a lower exposure to the financial services sector and a lower standard deviation. Overall, VGK has provided lower returns than IWN over the past 11 years.

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

Summary

VGKIWN
NameVanguard FTSE Europe Index Fund ETF SharesiShares Russell 2000 Value ETF
CategoryEurope StockSmall Value
IssuerVanguardiShares
AUM25.7B15.48B
Avg. Return6.68%10.96%
Div. Yield2.52%1.26%
Expense Ratio0.08%0.24%

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% with an expense ratio of 0.08%.

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%.

VGK’s dividend yield is 1.26% higher than that of IWN (2.52% vs. 1.26%). Also, VGK yielded on average 4.28% less per year over the past decade (6.68% vs. 10.96%). The expense ratio of VGK is 0.16 percentage points lower than IWN’s (0.08% vs. 0.24%).

Fund Composition

Industry Exposure

VGK vs. IWN - Industry Exposure

VGKIWN
Technology8.3%6.02%
Industrials15.58%14.58%
Energy4.3%5.84%
Communication Services5.09%4.17%
Utilities3.89%4.69%
Healthcare13.76%10.94%
Consumer Defensive11.39%3.77%
Real Estate2.57%14.36%
Financial Services15.85%22.97%
Consumer Cyclical11.6%8.39%
Basic Materials7.67%4.29%

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has the most exposure to the Financial Services sector at 15.85%. This is followed by Industrials and Healthcare at 15.58% and 13.76% respectively. Utilities (3.89%), Energy (4.3%), and Communication Services (5.09%) only make up 13.28% of the fund’s total assets.

VGK’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.67%, 8.3%, 11.39%, 11.6%, and 13.76%.

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%.

VGK is 7.12% less exposed to the Financial Services sector than IWN (15.85% vs 22.97%). VGK’s exposure to Industrials and Healthcare stocks is 1.00% higher and 2.82% higher respectively (15.58% vs. 14.58% and 13.76% vs. 10.94%). In total, Utilities, Energy, and Communication Services also make up 1.42% less of the fund’s holdings compared to IWN (13.28% vs. 14.70%).

Holdings

VGK - Holdings

VGK HoldingsWeight
Nestle SA2.82%
ASML Holding NV2.2%
Roche Holding AG2.13%
LVMH Moet Hennessy Louis Vuitton SE1.58%
Novartis AG1.55%
AstraZeneca PLC1.27%
SAP SE1.25%
Unilever PLC1.23%
Novo Nordisk A/S B1.09%
Siemens AG0.96%

VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.

AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.

IWN - Holdings

IWN HoldingsWeight
AMC Entertainment Holdings Inc Class A1.06%
Tenet Healthcare Corp0.47%
Stag Industrial Inc0.47%
Ovintiv Inc0.45%
EMCOR Group Inc0.42%
Valley National Bancorp0.37%
Chesapeake Energy Corp Ordinary Shares – New0.37%
Agree Realty Corp0.36%
Macy’s Inc0.35%
Essent Group Ltd0.35%

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

VGKIWN
Mean Return0.611.01
R-squared92.7672.64
Std. Deviation16.6519.28
Alpha0.45-6.32
Beta1.061.21
Sharpe Ratio0.40.59
Treynor Ratio5.128.3

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Mean Return of 0.61 with a Sharpe Ratio of 0.4 and a Alpha of 0.45. Its Treynor Ratio is 5.12 while VGK’s Beta is 1.06. Furthermore, the fund has a R-squared of 92.76 and a Standard Deviation of 16.65.

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

VGK’s Mean Return is 0.40 points lower than that of IWN and its R-squared is 20.12 points higher. With a Standard Deviation of 16.65, VGK is slightly less volatile than IWN. The Alpha and Beta of VGK are 6.77 points higher and 0.15 points lower than IWN’s Alpha and Beta.

Performance

Annual Returns

VGK vs. IWN - Annual Returns

YearVGKIWN
20206.5%4.5%
201924.26%22.17%
2018-14.79%-12.94%
201727.06%7.73%
2016-0.59%31.64%
2015-1.87%-7.53%
2014-6.56%4.13%
201324.93%34.3%
201221.01%17.92%
2011-11.49%-5.64%
20105.01%24.29%

VGK had its best year in 2017 with an annual return of 27.06%. VGK’s worst year over the past decade yielded -14.79% and occurred in 2018. In most years the Vanguard FTSE Europe Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to -0.59%, 5.01%, and 6.5% 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

VGK vs. IWN - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VGK$10,000$18,3506.68%
IWN$10,000$28,18910.96%

A $10,000 investment in VGK would have resulted in a final balance of $18,350. This is a profit of $8,350 over 11 years and amounts to a compound annual growth rate (CAGR) of 6.68%.

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%.

VGK’s CAGR is 4.28 percentage points lower than that of IWN and as a result, would have yielded $9,839 less on a $10,000 investment. Thus, VGK performed worse than IWN by 4.28% annually.

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *