The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and IWN is a iShares Small Value fund. So, what’s the difference between VIG and IWN? And which fund is better?
The expense ratio of VIG is 0.18 percentage points lower than IWN’s (0.06% vs. 0.24%). VIG also has a higher exposure to the industrials sector and a lower standard deviation. Overall, VIG has provided higher returns than IWN over the past ten years.
In this article, we’ll compare VIG vs. IWN. We’ll look at fund composition and annual returns, as well as at their performance and industry exposure. Moreover, I’ll also discuss VIG’s and IWN’s portfolio growth, holdings, and risk metrics and examine how these affect their overall returns.
Summary
| VIG | IWN | |
| Name | Vanguard Dividend Appreciation Index Fund ETF Shares | iShares Russell 2000 Value ETF |
| Category | Large Blend | Small Value |
| Issuer | Vanguard | iShares |
| AUM | 71.92B | 15.48B |
| Avg. Return | 13.35% | 10.96% |
| Div. Yield | 1.56% | 1.26% |
| Expense Ratio | 0.06% | 0.24% |
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 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%.
VIG’s dividend yield is 0.30% higher than that of IWN (1.56% vs. 1.26%). Also, VIG yielded on average 2.38% more per year over the past decade (13.35% vs. 10.96%). The expense ratio of VIG is 0.18 percentage points lower than IWN’s (0.06% vs. 0.24%).
Fund Composition
Industry Exposure
| VIG | IWN | |
| Technology | 14.93% | 6.02% |
| Industrials | 17.23% | 14.58% |
| Energy | 0.0% | 5.84% |
| Communication Services | 2.86% | 4.17% |
| Utilities | 2.81% | 4.69% |
| Healthcare | 15.52% | 10.94% |
| Consumer Defensive | 15.32% | 3.77% |
| Real Estate | 0.0% | 14.36% |
| Financial Services | 17.18% | 22.97% |
| Consumer Cyclical | 10.47% | 8.39% |
| Basic Materials | 3.67% | 4.29% |
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 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%.
VIG is 2.65% more exposed to the Industrials sector than IWN (17.23% vs 14.58%). VIG’s exposure to Financial Services and Healthcare stocks is 5.79% lower and 4.58% higher respectively (17.18% vs. 22.97% and 15.52% vs. 10.94%). In total, Energy, Utilities, and Communication Services also make up 9.03% less of the fund’s holdings compared to IWN (5.67% vs. 14.70%).
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%.
| IWN Holdings | Weight |
| AMC Entertainment Holdings Inc Class A | 1.06% |
| Tenet Healthcare Corp | 0.47% |
| Stag Industrial Inc | 0.47% |
| Ovintiv Inc | 0.45% |
| EMCOR Group Inc | 0.42% |
| Valley National Bancorp | 0.37% |
| Chesapeake Energy Corp Ordinary Shares – New | 0.37% |
| Agree Realty Corp | 0.36% |
| Macy’s Inc | 0.35% |
| Essent Group Ltd | 0.35% |
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%.
Risk Analysis
| VIG | IWN | |
| Mean Return | 1.09 | 1.01 |
| R-squared | 92.2 | 72.64 |
| Std. Deviation | 12.25 | 19.28 |
| Alpha | 0.12 | -6.32 |
| Beta | 0.86 | 1.21 |
| Sharpe Ratio | 1.01 | 0.59 |
| Treynor Ratio | 14.33 | 8.3 |
The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Treynor Ratio of 14.33 with a Standard Deviation of 12.25 and a Alpha of 0.12. Its Sharpe Ratio is 1.01 while VIG’s Beta is 0.86. Furthermore, the fund has a Mean Return of 1.09 and a R-squared of 92.2.
The iShares Russell 2000 Value ETF (IWN) has a Mean Return of 1.01 with a Sharpe Ratio of 0.59 and a Beta of 1.21. Its Standard Deviation is 19.28 while IWN’s R-squared is 72.64. Furthermore, the fund has a Alpha of -6.32 and a Treynor Ratio of 8.3.
VIG’s Mean Return is 0.08 points higher than that of IWN and its R-squared is 19.56 points higher. With a Standard Deviation of 12.25, VIG is slightly less volatile than IWN. The Alpha and Beta of VIG are 6.44 points higher and 0.35 points lower than IWN’s Alpha and Beta.
Performance
Annual Returns
| Year | VIG | IWN |
| 2020 | 15.46% | 4.5% |
| 2019 | 29.71% | 22.17% |
| 2018 | -2.02% | -12.94% |
| 2017 | 22.22% | 7.73% |
| 2016 | 11.84% | 31.64% |
| 2015 | -1.95% | -7.53% |
| 2014 | 10.06% | 4.13% |
| 2013 | 28.99% | 34.3% |
| 2012 | 11.61% | 17.92% |
| 2011 | 6.21% | -5.64% |
| 2010 | 14.67% | 24.29% |
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 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
| Fund | Initial Balance | Final Balance | CAGR |
| VIG | $10,000 | $37,951 | 13.35% |
| IWN | $10,000 | $28,189 | 10.96% |
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 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%.
VIG’s CAGR is 2.38 percentage points higher than that of IWN and as a result, would have yielded $9,762 more on a $10,000 investment. Thus, VIG outperformed IWN by 2.38% annually.
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