VIG vs. IWD: What’s The Difference?

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the iShares Russell 1000 Value ETF (IWD) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and IWD is a iShares Large Value fund. So, what’s the difference between VIG and IWD? And which fund is better?

The expense ratio of VIG is 0.13 percentage points lower than IWD’s (0.06% vs. 0.19%). VIG also has a higher exposure to the industrials sector and a lower standard deviation. Overall, VIG has provided higher returns than IWD over the past ten years.

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

Summary

VIG IWD
Name Vanguard Dividend Appreciation Index Fund ETF Shares iShares Russell 1000 Value ETF
Category Large Blend Large Value
Issuer Vanguard iShares
AUM 71.92B 54.1B
Avg. Return 13.35% 11.40%
Div. Yield 1.56% 1.57%
Expense Ratio 0.06% 0.19%

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 Value ETF (IWD) is a Large Value fund that is issued by iShares. It currently has 54.1B total assets under management and has yielded an average annual return of 11.40% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.19%.

VIG’s dividend yield is 0.01% lower than that of IWD (1.56% vs. 1.57%). Also, VIG yielded on average 1.95% more per year over the past decade (13.35% vs. 11.40%). The expense ratio of VIG is 0.13 percentage points lower than IWD’s (0.06% vs. 0.19%).

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Fund Composition

Industry Exposure

VIG vs. IWD - Industry Exposure

VIG IWD
Technology 14.93% 10.28%
Industrials 17.23% 11.77%
Energy 0.0% 4.76%
Communication Services 2.86% 8.67%
Utilities 2.81% 4.88%
Healthcare 15.52% 17.78%
Consumer Defensive 15.32% 7.76%
Real Estate 0.0% 4.94%
Financial Services 17.18% 20.43%
Consumer Cyclical 10.47% 5.62%
Basic Materials 3.67% 3.1%

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 Value ETF (IWD) has the most exposure to the Financial Services sector at 20.43%. This is followed by Healthcare and Industrials at 17.78% and 11.77% respectively. Energy (4.76%), Utilities (4.88%), and Real Estate (4.94%) only make up 14.58% of the fund’s total assets.

IWD’s mid-section with moderate exposure is comprised of Consumer Cyclical, Consumer Defensive, Communication Services, Technology, and Industrials stocks at 5.62%, 7.76%, 8.67%, 10.28%, and 11.77%.

VIG is 5.46% more exposed to the Industrials sector than IWD (17.23% vs 11.77%). VIG’s exposure to Financial Services and Healthcare stocks is 3.25% lower and 2.26% lower respectively (17.18% vs. 20.43% and 15.52% vs. 17.78%). In total, Energy, Utilities, and Communication Services also make up 12.64% less of the fund’s holdings compared to IWD (5.67% vs. 18.31%).

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%.

IWD - Holdings

IWD Holdings Weight
Berkshire Hathaway Inc Class B 2.58%
JPMorgan Chase & Co 2.25%
Johnson & Johnson 2.24%
UnitedHealth Group Inc 1.78%
Procter & Gamble Co 1.71%
The Walt Disney Co 1.5%
Bank of America Corp 1.43%
Comcast Corp Class A 1.33%
Exxon Mobil Corp 1.2%
Pfizer Inc 1.18%

IWD’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.58%, 2.25%, 2.24%, 1.78%, and 1.71%.

The Walt Disney Co (1.5%), Bank of America Corp (1.43%), and Comcast Corp Class A (1.33%) have a slightly smaller but still significant weight. Exxon Mobil Corp and Pfizer Inc are also represented in the IWD’s holdings at 1.2% and 1.18%.

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Risk Analysis

VIG IWD
Mean Return 1.09 1.03
R-squared 92.2 92.38
Std. Deviation 12.25 14.35
Alpha 0.12 -3.23
Beta 0.86 1.02
Sharpe Ratio 1.01 0.81
Treynor Ratio 14.33 11.06

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Alpha of 0.12 with a Beta of 0.86 and a Standard Deviation of 12.25. Its Treynor Ratio is 14.33 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 Russell 1000 Value ETF (IWD) has a Mean Return of 1.03 with a R-squared of 92.38 and a Alpha of -3.23. Its Beta is 1.02 while IWD’s Treynor Ratio is 11.06. Furthermore, the fund has a Sharpe Ratio of 0.81 and a Standard Deviation of 14.35.

VIG’s Mean Return is 0.06 points higher than that of IWD and its R-squared is 0.18 points lower. With a Standard Deviation of 12.25, VIG is slightly less volatile than IWD. The Alpha and Beta of VIG are 3.35 points higher and 0.16 points lower than IWD’s Alpha and Beta.

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Performance

Annual Returns

VIG vs. IWD - Annual Returns

Year VIG IWD
2020 15.46% 2.67%
2019 29.71% 26.34%
2018 -2.02% -8.4%
2017 22.22% 13.47%
2016 11.84% 17.09%
2015 -1.95% -3.95%
2014 10.06% 13.21%
2013 28.99% 32.18%
2012 11.61% 17.28%
2011 6.21% 0.21%
2010 14.67% 15.3%

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 IWD, returning 32.18% on an annual basis. The poorest year for IWD in the last ten years was 2018, with a yield of -8.4%. Most years the iShares Russell 1000 Value ETF has given investors modest returns, such as in 2014, 2017, and 2010, when gains were 13.21%, 13.47%, and 15.3% respectively.

Portfolio Growth

VIG vs. IWD - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VIG $10,000 $37,951 13.35%
IWD $10,000 $30,746 11.40%

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 IWD, the end total would have been $30,746. This equates to a $20,746 profit over 11 years and a compound annual growth rate (CAGR) of 11.40%.

VIG’s CAGR is 1.95 percentage points higher than that of IWD and as a result, would have yielded $7,205 more on a $10,000 investment. Thus, VIG outperformed IWD by 1.95% annually.


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