The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the iShares Russell Mid-Cap ETF (IWR) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and IWR is a iShares Mid-Cap Blend fund. So, what’s the difference between VIG and IWR? And which fund is better?
The expense ratio of VIG is 0.13 percentage points lower than IWR’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 lower returns than IWR over the past ten years.
In this article, we’ll compare VIG vs. IWR. We’ll look at portfolio growth and risk metrics, as well as at their fund composition and industry exposure. Moreover, I’ll also discuss VIG’s and IWR’s holdings, performance, and annual returns and examine how these affect their overall returns.
|Name||Vanguard Dividend Appreciation Index Fund ETF Shares||iShares Russell Mid-Cap ETF|
|Category||Large Blend||Mid-Cap 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 Mid-Cap ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% with an expense ratio of 0.19%.
VIG’s dividend yield is 0.57% higher than that of IWR (1.56% vs. 0.99%). Also, VIG yielded on average 0.81% less per year over the past decade (13.35% vs. 14.15%). The expense ratio of VIG is 0.13 percentage points lower than IWR’s (0.06% vs. 0.19%).
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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 Mid-Cap ETF (IWR) has the most exposure to the Technology sector at 19.67%. This is followed by Industrials and Consumer Cyclical at 14.54% and 13.59% respectively. Consumer Defensive (3.82%), Basic Materials (4.1%), and Utilities (4.46%) only make up 12.38% of the fund’s total assets.
IWR’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Healthcare, and Consumer Cyclical stocks at 4.64%, 8.31%, 11.64%, 11.76%, and 13.59%.
VIG is 2.69% more exposed to the Industrials sector than IWR (17.23% vs 14.54%). VIG’s exposure to Financial Services and Healthcare stocks is 5.54% higher and 3.76% higher respectively (17.18% vs. 11.64% and 15.52% vs. 11.76%). In total, Energy, Utilities, and Communication Services also make up 6.91% less of the fund’s holdings compared to IWR (5.67% vs. 12.58%).
|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%.
|IDEXX Laboratories Inc||0.51%|
|Chipotle Mexican Grill Inc||0.47%|
|Roku Inc Class A||0.44%|
|Marvell Technology Inc||0.44%|
|Trane Technologies PLC||0.43%|
|Carrier Global Corp Ordinary Shares||0.43%|
IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.
Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.
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The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Treynor Ratio of 14.33 with a Beta of 0.86 and a Sharpe Ratio of 1.01. Its Standard Deviation is 12.25 while VIG’s Mean Return is 1.09. Furthermore, the fund has a R-squared of 92.2 and a Alpha of 0.12.
The iShares Russell Mid-Cap ETF (IWR) has a Sharpe Ratio of 0.86 with a Beta of 1.11 and a Alpha of -2.8. Its Treynor Ratio is 11.72 while IWR’s R-squared is 91.52. Furthermore, the fund has a Standard Deviation of 15.66 and a Mean Return of 1.17.
VIG’s Mean Return is 0.08 points lower than that of IWR and its R-squared is 0.68 points higher. With a Standard Deviation of 12.25, VIG is slightly less volatile than IWR. The Alpha and Beta of VIG are 2.92 points higher and 0.25 points lower than IWR’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 IWR, returning 34.5% on an annual basis. The poorest year for IWR in the last ten years was 2018, with a yield of -9.13%. Most years the iShares Russell Mid-Cap ETF has given investors modest returns, such as in 2016, 2020, and 2012, when gains were 13.58%, 16.91%, and 17.13% 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 IWR, the end total would have been $39,751. This equates to a $29,751 profit over 11 years and a compound annual growth rate (CAGR) of 14.15%.
VIG’s CAGR is 0.81 percentage points lower than that of IWR and as a result, would have yielded $1,800 less on a $10,000 investment. Thus, VIG performed worse than IWR by 0.81% annually.
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