VGT vs. IWP: What’s The Difference?

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

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

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

Summary

VGT IWP
Name Vanguard Information Technology Index Fund ETF Shares iShares Russell Mid-Cap Growth ETF
Category Technology Mid-Cap Growth
Issuer Vanguard iShares
AUM 54.13B 15.7B
Avg. Return 20.84% 16.75%
Div. Yield 0.66% 0.26%
Expense Ratio 0.1% 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 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%.

VGT’s dividend yield is 0.40% higher than that of IWP (0.66% vs. 0.26%). Also, VGT yielded on average 4.09% more per year over the past decade (20.84% vs. 16.75%). The expense ratio of VGT is 0.14 percentage points lower than IWP’s (0.1% vs. 0.24%).

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Fund Composition

Industry Exposure

VGT vs. IWP - Industry Exposure

VGT IWP
Technology 88.89% 33.88%
Industrials 1.67% 14.09%
Energy 0.0% 1.51%
Communication Services 0.61% 6.32%
Utilities 0.0% 0.16%
Healthcare 0.0% 16.79%
Consumer Defensive 0.0% 2.32%
Real Estate 0.0% 2.46%
Financial Services 8.83% 4.52%
Consumer Cyclical 0.0% 16.09%
Basic Materials 0.0% 1.86%

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 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%.

VGT is 55.01% more exposed to the Technology sector than IWP (88.89% vs 33.88%). VGT’s exposure to Financial Services and Industrials stocks is 4.31% higher and 12.42% lower respectively (8.83% vs. 4.52% and 1.67% vs. 14.09%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 20.87% less of the fund’s holdings compared to IWP (0.00% vs. 20.87%).

Holdings

VGT - Holdings

VGT Holdings Weight
Apple Inc 19.58%
Microsoft Corp 16.53%
NVIDIA Corp 4.22%
Visa Inc Class A 3.16%
PayPal Holdings Inc 2.76%
Mastercard Inc Class A 2.76%
Adobe Inc 2.39%
Intel Corp 1.94%
Salesforce.com Inc 1.91%
Cisco Systems Inc 1.9%

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%.

IWP - Holdings

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%.

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Risk Analysis

VGT IWP
Mean Return 1.76 1.27
R-squared 74.84 87.01
Std. Deviation 16.61 16.05
Alpha 10.41 -1.03
Beta 1.02 1.1
Sharpe Ratio 1.23 0.91
Treynor Ratio 20.55 12.98

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

The iShares Russell Mid-Cap Growth ETF (IWP) has a Alpha of -1.03 with a R-squared of 87.01 and a Treynor Ratio of 12.98. Its Sharpe Ratio is 0.91 while IWP’s Beta is 1.1. Furthermore, the fund has a Mean Return of 1.27 and a Standard Deviation of 16.05.

VGT’s Mean Return is 0.49 points higher than that of IWP and its R-squared is 12.17 points lower. With a Standard Deviation of 16.61, VGT is slightly more volatile than IWP. The Alpha and Beta of VGT are 11.44 points higher and 0.08 points lower than IWP’s Alpha and Beta.

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Performance

Annual Returns

VGT vs. IWP - Annual Returns

Year VGT IWP
2020 45.94% 35.29%
2019 48.68% 35.14%
2018 2.52% -4.95%
2017 37.07% 24.98%
2016 13.73% 7.15%
2015 5.02% -0.39%
2014 18.01% 11.68%
2013 30.91% 35.44%
2012 14.05% 15.62%
2011 0.52% -1.82%
2010 12.74% 26.1%

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 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

VGT vs. IWP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VGT $10,000 $72,718 20.84%
IWP $10,000 $50,191 16.75%

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 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%.

VGT’s CAGR is 4.09 percentage points higher than that of IWP and as a result, would have yielded $22,527 more on a $10,000 investment. Thus, VGT outperformed IWP by 4.09% annually.


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