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VGK vs. IWS: What’s The Difference?

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

The expense ratio of VGK is 0.15 percentage points lower than IWS’s (0.08% vs. 0.23%). VGK also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VGK has provided lower returns than IWS over the past 11 years.

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

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Summary

VGKIWS
NameVanguard FTSE Europe Index Fund ETF SharesiShares Russell Mid-Cap Value ETF
CategoryEurope StockMid-Cap Value
IssuerVanguardiShares
AUM25.7B14.24B
Avg. Return6.68%12.35%
Div. Yield2.52%1.34%
Expense Ratio0.08%0.23%

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 Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

VGK’s dividend yield is 1.18% higher than that of IWS (2.52% vs. 1.34%). Also, VGK yielded on average 5.67% less per year over the past decade (6.68% vs. 12.35%). The expense ratio of VGK is 0.15 percentage points lower than IWS’s (0.08% vs. 0.23%).

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Fund Composition

Industry Exposure

VGK vs. IWS - Industry Exposure

VGKIWS
Technology8.3%11.39%
Industrials15.58%14.6%
Energy4.3%4.71%
Communication Services5.09%4.08%
Utilities3.89%6.97%
Healthcare13.76%8.56%
Consumer Defensive11.39%4.76%
Real Estate2.57%11.71%
Financial Services15.85%15.75%
Consumer Cyclical11.6%12.07%
Basic Materials7.67%5.4%

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 Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.

IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.

VGK is 0.10% more exposed to the Financial Services sector than IWS (15.85% vs 15.75%). VGK’s exposure to Industrials and Healthcare stocks is 0.98% higher and 5.20% higher respectively (15.58% vs. 14.6% and 13.76% vs. 8.56%). In total, Utilities, Energy, and Communication Services also make up 2.48% less of the fund’s holdings compared to IWS (13.28% vs. 15.76%).

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%.

IWS - Holdings

IWS HoldingsWeight
Twitter Inc0.69%
Marvell Technology Inc0.69%
IHS Markit Ltd0.62%
Prudential Financial Inc0.56%
Otis Worldwide Corp Ordinary Shares0.54%
International Flavors & Fragrances Inc0.53%
Xcel Energy Inc0.52%
Motorola Solutions Inc0.52%
Aptiv PLC0.52%
Aflac Inc0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

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Risk Analysis

VGKIWS
Mean Return0.611.06
R-squared92.7687.04
Std. Deviation16.6516.03
Alpha0.45-4.11
Beta1.061.1
Sharpe Ratio0.40.75
Treynor Ratio5.1210.3

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

The iShares Russell Mid-Cap Value ETF (IWS) has a R-squared of 87.04 with a Mean Return of 1.06 and a Alpha of -4.11. Its Treynor Ratio is 10.3 while IWS’s Beta is 1.1. Furthermore, the fund has a Sharpe Ratio of 0.75 and a Standard Deviation of 16.03.

VGK’s Mean Return is 0.45 points lower than that of IWS and its R-squared is 5.72 points higher. With a Standard Deviation of 16.65, VGK is slightly more volatile than IWS. The Alpha and Beta of VGK are 4.56 points higher and 0.04 points lower than IWS’s Alpha and Beta.

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Performance

Annual Returns

VGK vs. IWS - Annual Returns

YearVGKIWS
20206.5%4.76%
201924.26%26.78%
2018-14.79%-12.36%
201727.06%13.1%
2016-0.59%19.69%
2015-1.87%-4.93%
2014-6.56%14.49%
201324.93%33.11%
201221.01%18.27%
2011-11.49%-1.55%
20105.01%24.46%

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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

VGK vs. IWS - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VGK$10,000$18,3506.68%
IWS$10,000$33,08312.35%

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 IWS, the end total would have been $33,083. This equates to a $23,083 profit over 11 years and a compound annual growth rate (CAGR) of 12.35%.

VGK’s CAGR is 5.67 percentage points lower than that of IWS and as a result, would have yielded $14,733 less on a $10,000 investment. Thus, VGK performed worse than IWS by 5.67% annually.


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