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VGT vs. IWN: What’s The Difference?

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

The expense ratio of VGT is 0.14 percentage points lower than IWN’s (0.1% vs. 0.24%). VGT also has a higher exposure to the technology sector and a lower standard deviation. Overall, VGT has provided higher returns than IWN over the past ten years.

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

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Summary

VGTIWN
NameVanguard Information Technology Index Fund ETF SharesiShares Russell 2000 Value ETF
CategoryTechnologySmall Value
IssuerVanguardiShares
AUM54.13B15.48B
Avg. Return20.84%10.96%
Div. Yield0.66%1.26%
Expense Ratio0.1%0.24%

The Vanguard Information Technology Index Fund ETF Shares (VGT) is a Technology fund that is issued by Vanguard. It currently has 54.13B total assets under management and has yielded an average annual return of 20.84% over the past 10 years. The fund has a dividend yield of 0.66% with an expense ratio of 0.1%.

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%.

VGT’s dividend yield is 0.60% lower than that of IWN (0.66% vs. 1.26%). Also, VGT yielded on average 9.87% more per year over the past decade (20.84% vs. 10.96%). The expense ratio of VGT is 0.14 percentage points lower than IWN’s (0.1% vs. 0.24%).

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Fund Composition

Industry Exposure

VGT vs. IWN - Industry Exposure

VGTIWN
Technology88.89%6.02%
Industrials1.67%14.58%
Energy0.0%5.84%
Communication Services0.61%4.17%
Utilities0.0%4.69%
Healthcare0.0%10.94%
Consumer Defensive0.0%3.77%
Real Estate0.0%14.36%
Financial Services8.83%22.97%
Consumer Cyclical0.0%8.39%
Basic Materials0.0%4.29%

The Vanguard Information Technology Index Fund ETF Shares (VGT) has the most exposure to the Technology sector at 88.89%. This is followed by Financial Services and Industrials at 8.83% and 1.67% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.

VGT’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Energy, Communication Services, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.61%, and 1.67%.

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%.

VGT is 82.87% more exposed to the Technology sector than IWN (88.89% vs 6.02%). VGT’s exposure to Financial Services and Industrials stocks is 14.14% lower and 12.91% lower respectively (8.83% vs. 22.97% and 1.67% vs. 14.58%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 26.52% less of the fund’s holdings compared to IWN (0.00% vs. 26.52%).

Holdings

VGT - Holdings

VGT HoldingsWeight
Apple Inc19.58%
Microsoft Corp16.53%
NVIDIA Corp4.22%
Visa Inc Class A3.16%
PayPal Holdings Inc2.76%
Mastercard Inc Class A2.76%
Adobe Inc2.39%
Intel Corp1.94%
Salesforce.com Inc1.91%
Cisco Systems Inc1.9%

VGT’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 19.58%, 16.53%, 4.22%, 3.16%, and 2.76%.

Mastercard Inc Class A (2.76%), Adobe Inc (2.39%), and Intel Corp (1.94%) have a slightly smaller but still significant weight. Salesforce.com Inc and Cisco Systems Inc are also represented in the VGT’s holdings at 1.91% and 1.9%.

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%.

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Risk Analysis

VGTIWN
Mean Return1.761.01
R-squared74.8472.64
Std. Deviation16.6119.28
Alpha10.41-6.32
Beta1.021.21
Sharpe Ratio1.230.59
Treynor Ratio20.558.3

The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Treynor Ratio of 20.55 with a Standard Deviation of 16.61 and a Alpha of 10.41. Its Mean Return is 1.76 while VGT’s Beta is 1.02. Furthermore, the fund has a R-squared of 74.84 and a Sharpe Ratio of 1.23.

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

VGT’s Mean Return is 0.75 points higher than that of IWN and its R-squared is 2.20 points higher. With a Standard Deviation of 16.61, VGT is slightly less volatile than IWN. The Alpha and Beta of VGT are 16.73 points higher and 0.19 points lower than IWN’s Alpha and Beta.

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Performance

Annual Returns

VGT vs. IWN - Annual Returns

YearVGTIWN
202045.94%4.5%
201948.68%22.17%
20182.52%-12.94%
201737.07%7.73%
201613.73%31.64%
20155.02%-7.53%
201418.01%4.13%
201330.91%34.3%
201214.05%17.92%
20110.52%-5.64%
201012.74%24.29%

VGT had its best year in 2019 with an annual return of 48.68%. VGT’s worst year over the past decade yielded 0.52% and occurred in 2011. In most years the Vanguard Information Technology Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2014 where annual returns amounted to 13.73%, 14.05%, and 18.01% 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

VGT vs. IWN - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VGT$10,000$72,71820.84%
IWN$10,000$28,18910.96%

A $10,000 investment in VGT would have resulted in a final balance of $72,718. This is a profit of $62,718 over 11 years and amounts to a compound annual growth rate (CAGR) of 20.84%.

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%.

VGT’s CAGR is 9.87 percentage points higher than that of IWN and as a result, would have yielded $44,529 more on a $10,000 investment. Thus, VGT outperformed IWN by 9.87% annually.


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