The Vanguard FTSE Europe Index Fund ETF Shares (VGK) and the iShares Russell Mid-Cap Growth ETF (IWP) are both among the Top 100 ETFs. VGK is a Vanguard Europe Stock fund and IWP is a iShares Mid-Cap Growth fund. So, what’s the difference between VGK and IWP? And which fund is better?
The expense ratio of VGK is 0.16 percentage points lower than IWP’s (0.08% vs. 0.24%). VGK also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VGK has provided lower returns than IWP over the past 11 years.
In this article, we’ll compare VGK vs. IWP. We’ll look at annual returns and holdings, as well as at their performance and fund composition. Moreover, I’ll also discuss VGK’s and IWP’s risk metrics, industry exposure, and portfolio growth and examine how these affect their overall returns.
Summary
| VGK | IWP | |
| Name | Vanguard FTSE Europe Index Fund ETF Shares | iShares Russell Mid-Cap Growth ETF |
| Category | Europe Stock | Mid-Cap Growth |
| Issuer | Vanguard | iShares |
| AUM | 25.7B | 15.7B |
| Avg. Return | 6.68% | 16.75% |
| Div. Yield | 2.52% | 0.26% |
| Expense Ratio | 0.08% | 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 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%.
VGK’s dividend yield is 2.26% higher than that of IWP (2.52% vs. 0.26%). Also, VGK yielded on average 10.07% less per year over the past decade (6.68% vs. 16.75%). The expense ratio of VGK is 0.16 percentage points lower than IWP’s (0.08% vs. 0.24%).
Fund Composition
Industry Exposure
| VGK | IWP | |
| Technology | 8.3% | 33.88% |
| Industrials | 15.58% | 14.09% |
| Energy | 4.3% | 1.51% |
| Communication Services | 5.09% | 6.32% |
| Utilities | 3.89% | 0.16% |
| Healthcare | 13.76% | 16.79% |
| Consumer Defensive | 11.39% | 2.32% |
| Real Estate | 2.57% | 2.46% |
| Financial Services | 15.85% | 4.52% |
| Consumer Cyclical | 11.6% | 16.09% |
| Basic Materials | 7.67% | 1.86% |
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 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%.
VGK is 11.33% more exposed to the Financial Services sector than IWP (15.85% vs 4.52%). VGK’s exposure to Industrials and Healthcare stocks is 1.49% higher and 3.03% lower respectively (15.58% vs. 14.09% and 13.76% vs. 16.79%). In total, Utilities, Energy, and Communication Services also make up 5.29% more of the fund’s holdings compared to IWP (13.28% vs. 7.99%).
Holdings
| VGK Holdings | Weight |
| Nestle SA | 2.82% |
| ASML Holding NV | 2.2% |
| Roche Holding AG | 2.13% |
| LVMH Moet Hennessy Louis Vuitton SE | 1.58% |
| Novartis AG | 1.55% |
| AstraZeneca PLC | 1.27% |
| SAP SE | 1.25% |
| Unilever PLC | 1.23% |
| Novo Nordisk A/S B | 1.09% |
| Siemens AG | 0.96% |
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%.
| 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
| VGK | IWP | |
| Mean Return | 0.61 | 1.27 |
| R-squared | 92.76 | 87.01 |
| Std. Deviation | 16.65 | 16.05 |
| Alpha | 0.45 | -1.03 |
| Beta | 1.06 | 1.1 |
| Sharpe Ratio | 0.4 | 0.91 |
| Treynor Ratio | 5.12 | 12.98 |
The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a R-squared of 92.76 with a Beta of 1.06 and a Mean Return of 0.61. Its Standard Deviation is 16.65 while VGK’s Treynor Ratio is 5.12. Furthermore, the fund has a Sharpe Ratio of 0.4 and a Alpha of 0.45.
The iShares Russell Mid-Cap Growth ETF (IWP) has a R-squared of 87.01 with a Treynor Ratio of 12.98 and a Alpha of -1.03. Its Mean Return is 1.27 while IWP’s Standard Deviation is 16.05. Furthermore, the fund has a Beta of 1.1 and a Sharpe Ratio of 0.91.
VGK’s Mean Return is 0.66 points lower than that of IWP and its R-squared is 5.75 points higher. With a Standard Deviation of 16.65, VGK is slightly more volatile than IWP. The Alpha and Beta of VGK are 1.48 points higher and 0.04 points lower than IWP’s Alpha and Beta.
Performance
Annual Returns
| Year | VGK | IWP |
| 2020 | 6.5% | 35.29% |
| 2019 | 24.26% | 35.14% |
| 2018 | -14.79% | -4.95% |
| 2017 | 27.06% | 24.98% |
| 2016 | -0.59% | 7.15% |
| 2015 | -1.87% | -0.39% |
| 2014 | -6.56% | 11.68% |
| 2013 | 24.93% | 35.44% |
| 2012 | 21.01% | 15.62% |
| 2011 | -11.49% | -1.82% |
| 2010 | 5.01% | 26.1% |
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 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 |
| VGK | $10,000 | $18,350 | 6.68% |
| IWP | $10,000 | $50,191 | 16.75% |
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 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%.
VGK’s CAGR is 10.07 percentage points lower than that of IWP and as a result, would have yielded $31,841 less on a $10,000 investment. Thus, VGK performed worse than IWP by 10.07% annually.
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