VIG vs. IVW: What’s The Difference?

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the iShares S&P 500 Growth ETF (IVW) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and IVW is a iShares Large Growth fund. So, what’s the difference between VIG and IVW? And which fund is better?

The expense ratio of VIG is 0.12 percentage points lower than IVW’s (0.06% vs. 0.18%). VIG also has a higher exposure to the industrials sector and a lower standard deviation. Overall, VIG has provided lower returns than IVW over the past ten years.

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

Summary

VIG IVW
Name Vanguard Dividend Appreciation Index Fund ETF Shares iShares S&P 500 Growth ETF
Category Large Blend Large Growth
Issuer Vanguard iShares
AUM 71.92B 35.72B
Avg. Return 13.35% 16.74%
Div. Yield 1.56% 0.61%
Expense Ratio 0.06% 0.18%

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) is a Large Blend fund that is issued by Vanguard. It currently has 71.92B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.56% with an expense ratio of 0.06%.

The iShares S&P 500 Growth ETF (IVW) is a Large Growth fund that is issued by iShares. It currently has 35.72B total assets under management and has yielded an average annual return of 16.74% over the past 10 years. The fund has a dividend yield of 0.61% with an expense ratio of 0.18%.

VIG’s dividend yield is 0.95% higher than that of IVW (1.56% vs. 0.61%). Also, VIG yielded on average 3.39% less per year over the past decade (13.35% vs. 16.74%). The expense ratio of VIG is 0.12 percentage points lower than IVW’s (0.06% vs. 0.18%).

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Fund Composition

Industry Exposure

VIG vs. IVW - Industry Exposure

VIG IVW
Technology 14.93% 37.8%
Industrials 17.23% 5.72%
Energy 0.0% 0.06%
Communication Services 2.86% 15.44%
Utilities 2.81% 0.47%
Healthcare 15.52% 11.88%
Consumer Defensive 15.32% 3.84%
Real Estate 0.0% 1.11%
Financial Services 17.18% 6.78%
Consumer Cyclical 10.47% 15.25%
Basic Materials 3.67% 1.65%

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has the most exposure to the Industrials sector at 17.23%. This is followed by Financial Services and Healthcare at 17.18% and 15.52% respectively. Energy (0.0%), Utilities (2.81%), and Communication Services (2.86%) only make up 5.67% of the fund’s total assets.

VIG’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Cyclical, Technology, Consumer Defensive, and Healthcare stocks at 3.67%, 10.47%, 14.93%, 15.32%, and 15.52%.

The iShares S&P 500 Growth ETF (IVW) has the most exposure to the Technology sector at 37.8%. This is followed by Communication Services and Consumer Cyclical at 15.44% and 15.25% respectively. Utilities (0.47%), Real Estate (1.11%), and Basic Materials (1.65%) only make up 3.23% of the fund’s total assets.

IVW’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 3.84%, 5.72%, 6.78%, 11.88%, and 15.25%.

VIG is 11.51% more exposed to the Industrials sector than IVW (17.23% vs 5.72%). VIG’s exposure to Financial Services and Healthcare stocks is 10.40% higher and 3.64% higher respectively (17.18% vs. 6.78% and 15.52% vs. 11.88%). In total, Energy, Utilities, and Communication Services also make up 10.30% less of the fund’s holdings compared to IVW (5.67% vs. 15.97%).

Holdings

VIG - Holdings

VIG Holdings Weight
Microsoft Corp 4.19%
JPMorgan Chase & Co 3.8%
Johnson & Johnson 3.67%
Walmart Inc 3.38%
Visa Inc Class A 3.22%
UnitedHealth Group Inc 3.22%
The Home Depot Inc 2.91%
Procter & Gamble Co 2.82%
Comcast Corp Class A 2.21%
Coca-Cola Co 1.98%

VIG’s Top Holdings are Microsoft Corp, JPMorgan Chase & Co, Johnson & Johnson, Walmart Inc, and Visa Inc Class A at 4.19%, 3.8%, 3.67%, 3.38%, and 3.22%.

UnitedHealth Group Inc (3.22%), The Home Depot Inc (2.91%), and Procter & Gamble Co (2.82%) have a slightly smaller but still significant weight. Comcast Corp Class A and Coca-Cola Co are also represented in the VIG’s holdings at 2.21% and 1.98%.

IVW - Holdings

IVW Holdings Weight
Apple Inc 11.46%
Microsoft Corp 10.75%
Amazon.com Inc 7.14%
Facebook Inc Class A 4.28%
Alphabet Inc Class A 4.06%
Alphabet Inc Class C 3.86%
Tesla Inc 2.65%
NVIDIA Corp 2.43%
PayPal Holdings Inc 1.62%
Adobe Inc 1.49%

IVW’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 11.46%, 10.75%, 7.14%, 4.28%, and 4.06%.

Alphabet Inc Class C (3.86%), Tesla Inc (2.65%), and NVIDIA Corp (2.43%) have a slightly smaller but still significant weight. PayPal Holdings Inc and Adobe Inc are also represented in the IVW’s holdings at 1.62% and 1.49%.

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Risk Analysis

VIG IVW
Mean Return 1.09 1.44
R-squared 92.2 93.82
Std. Deviation 12.25 13.77
Alpha 0.12 2.19
Beta 0.86 0.98
Sharpe Ratio 1.01 1.21
Treynor Ratio 14.33 17.24

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Beta of 0.86 with a Treynor Ratio of 14.33 and a Alpha of 0.12. Its Standard Deviation is 12.25 while VIG’s R-squared is 92.2. Furthermore, the fund has a Sharpe Ratio of 1.01 and a Mean Return of 1.09.

The iShares S&P 500 Growth ETF (IVW) has a Beta of 0.98 with a R-squared of 93.82 and a Sharpe Ratio of 1.21. Its Alpha is 2.19 while IVW’s Standard Deviation is 13.77. Furthermore, the fund has a Mean Return of 1.44 and a Treynor Ratio of 17.24.

VIG’s Mean Return is 0.35 points lower than that of IVW and its R-squared is 1.62 points lower. With a Standard Deviation of 12.25, VIG is slightly less volatile than IVW. The Alpha and Beta of VIG are 2.07 points lower and 0.12 points lower than IVW’s Alpha and Beta.

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Performance

Annual Returns

VIG vs. IVW - Annual Returns

Year VIG IVW
2020 15.46% 33.21%
2019 29.71% 30.91%
2018 -2.02% -0.17%
2017 22.22% 27.2%
2016 11.84% 6.74%
2015 -1.95% 5.33%
2014 10.06% 14.67%
2013 28.99% 32.48%
2012 11.61% 14.39%
2011 6.21% 4.49%
2010 14.67% 14.84%

VIG had its best year in 2019 with an annual return of 29.71%. VIG’s worst year over the past decade yielded -2.02% and occurred in 2018. In most years the Vanguard Dividend Appreciation Index Fund ETF Shares provided moderate returns such as in 2012, 2016, and 2010 where annual returns amounted to 11.61%, 11.84%, and 14.67% respectively.

The year 2020 was the strongest year for IVW, returning 33.21% on an annual basis. The poorest year for IVW in the last ten years was 2018, with a yield of -0.17%. Most years the iShares S&P 500 Growth ETF has given investors modest returns, such as in 2012, 2014, and 2010, when gains were 14.39%, 14.67%, and 14.84% respectively.

Portfolio Growth

VIG vs. IVW - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VIG $10,000 $37,951 13.35%
IVW $10,000 $51,915 16.74%

A $10,000 investment in VIG would have resulted in a final balance of $37,951. This is a profit of $27,951 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.35%.

With a $10,000 investment in IVW, the end total would have been $51,915. This equates to a $41,915 profit over 11 years and a compound annual growth rate (CAGR) of 16.74%.

VIG’s CAGR is 3.39 percentage points lower than that of IVW and as a result, would have yielded $13,964 less on a $10,000 investment. Thus, VIG performed worse than IVW by 3.39% annually.


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