The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the iShares Russell 1000 ETF (IWB) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and IWB is a iShares Large Blend fund. So, what’s the difference between VIG and IWB? And which fund is better?
The expense ratio of VIG is 0.09 percentage points lower than IWB’s (0.06% vs. 0.15%). VIG also has a higher exposure to the industrials sector and a lower standard deviation. Overall, VIG has provided lower returns than IWB over the past ten years.
In this article, we’ll compare VIG vs. IWB. We’ll look at industry exposure and fund composition, as well as at their risk metrics and portfolio growth. Moreover, I’ll also discuss VIG’s and IWB’s annual returns, performance, and holdings and examine how these affect their overall returns.
|Name||Vanguard Dividend Appreciation Index Fund ETF Shares||iShares Russell 1000 ETF|
|Category||Large Blend||Large Blend|
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 Russell 1000 ETF (IWB) is a Large Blend fund that is issued by iShares. It currently has 30.54B total assets under management and has yielded an average annual return of 14.64% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.15%.
VIG’s dividend yield is 0.42% higher than that of IWB (1.56% vs. 1.14%). Also, VIG yielded on average 1.29% less per year over the past decade (13.35% vs. 14.64%). The expense ratio of VIG is 0.09 percentage points lower than IWB’s (0.06% vs. 0.15%).
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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 Russell 1000 ETF (IWB) has the most exposure to the Technology sector at 25.33%. This is followed by Financial Services and Healthcare at 13.64% and 13.35% respectively. Utilities (2.36%), Energy (2.44%), and Real Estate (3.34%) only make up 8.14% of the fund’s total assets.
IWB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.88%, 10.83%, 11.85%, and 13.35%.
VIG is 8.35% more exposed to the Industrials sector than IWB (17.23% vs 8.88%). VIG’s exposure to Financial Services and Healthcare stocks is 3.54% higher and 2.17% higher respectively (17.18% vs. 13.64% and 15.52% vs. 13.35%). In total, Energy, Utilities, and Communication Services also make up 9.96% less of the fund’s holdings compared to IWB (5.67% vs. 15.63%).
|JPMorgan Chase & Co||3.8%|
|Johnson & Johnson||3.67%|
|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%|
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%.
|Facebook Inc Class A||2.03%|
|Alphabet Inc Class A||1.93%|
|Alphabet Inc Class C||1.82%|
|Berkshire Hathaway Inc Class B||1.24%|
|JPMorgan Chase & Co||1.09%|
IWB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.45%, 5.11%, 3.43%, 2.03%, and 1.93%.
Alphabet Inc Class C (1.82%), Tesla Inc (1.27%), and Berkshire Hathaway Inc Class B (1.24%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the IWB’s holdings at 1.11% and 1.09%.
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The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a R-squared of 92.2 with a Mean Return of 1.09 and a Beta of 0.86. Its Treynor Ratio is 14.33 while VIG’s Sharpe Ratio is 1.01. Furthermore, the fund has a Alpha of 0.12 and a Standard Deviation of 12.25.
The iShares Russell 1000 ETF (IWB) has a Sharpe Ratio of 1.05 with a Treynor Ratio of 14.31 and a R-squared of 99.73. Its Beta is 1.02 while IWB’s Standard Deviation is 13.87. Furthermore, the fund has a Alpha of -0.38 and a Mean Return of 1.27.
VIG’s Mean Return is 0.18 points lower than that of IWB and its R-squared is 7.53 points lower. With a Standard Deviation of 12.25, VIG is slightly less volatile than IWB. The Alpha and Beta of VIG are 0.50 points higher and 0.16 points lower than IWB’s Alpha and Beta.
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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 2013 was the strongest year for IWB, returning 32.93% on an annual basis. The poorest year for IWB in the last ten years was 2018, with a yield of -4.91%. Most years the iShares Russell 1000 ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.08%, 15.94%, and 16.27% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 IWB, the end total would have been $42,462. This equates to a $32,462 profit over 11 years and a compound annual growth rate (CAGR) of 14.64%.
VIG’s CAGR is 1.29 percentage points lower than that of IWB and as a result, would have yielded $4,511 less on a $10,000 investment. Thus, VIG performed worse than IWB by 1.29% annually.
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