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VIG vs. IWS: What’s The Difference?

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

The expense ratio of VIG is 0.17 percentage points lower than IWS’s (0.06% vs. 0.23%). VIG also has a higher exposure to the industrials sector and a lower standard deviation. Overall, VIG has provided higher returns than IWS over the past ten years.

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

Summary

VIGIWS
NameVanguard Dividend Appreciation Index Fund ETF SharesiShares Russell Mid-Cap Value ETF
CategoryLarge BlendMid-Cap Value
IssuerVanguardiShares
AUM71.92B14.24B
Avg. Return13.35%12.35%
Div. Yield1.56%1.34%
Expense Ratio0.06%0.23%

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 Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

VIG’s dividend yield is 0.22% higher than that of IWS (1.56% vs. 1.34%). Also, VIG yielded on average 1.00% more per year over the past decade (13.35% vs. 12.35%). The expense ratio of VIG is 0.17 percentage points lower than IWS’s (0.06% vs. 0.23%).

Fund Composition

Industry Exposure

VIG vs. IWS - Industry Exposure

VIGIWS
Technology14.93%11.39%
Industrials17.23%14.6%
Energy0.0%4.71%
Communication Services2.86%4.08%
Utilities2.81%6.97%
Healthcare15.52%8.56%
Consumer Defensive15.32%4.76%
Real Estate0.0%11.71%
Financial Services17.18%15.75%
Consumer Cyclical10.47%12.07%
Basic Materials3.67%5.4%

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 Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.

IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.

VIG is 2.63% more exposed to the Industrials sector than IWS (17.23% vs 14.6%). VIG’s exposure to Financial Services and Healthcare stocks is 1.43% higher and 6.96% higher respectively (17.18% vs. 15.75% and 15.52% vs. 8.56%). In total, Energy, Utilities, and Communication Services also make up 10.09% less of the fund’s holdings compared to IWS (5.67% vs. 15.76%).

Holdings

VIG - Holdings

VIG HoldingsWeight
Microsoft Corp4.19%
JPMorgan Chase & Co3.8%
Johnson & Johnson3.67%
Walmart Inc3.38%
Visa Inc Class A3.22%
UnitedHealth Group Inc3.22%
The Home Depot Inc2.91%
Procter & Gamble Co2.82%
Comcast Corp Class A2.21%
Coca-Cola Co1.98%

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%.

IWS - Holdings

IWS HoldingsWeight
Twitter Inc0.69%
Marvell Technology Inc0.69%
IHS Markit Ltd0.62%
Prudential Financial Inc0.56%
Otis Worldwide Corp Ordinary Shares0.54%
International Flavors & Fragrances Inc0.53%
Xcel Energy Inc0.52%
Motorola Solutions Inc0.52%
Aptiv PLC0.52%
Aflac Inc0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

Risk Analysis

VIGIWS
Mean Return1.091.06
R-squared92.287.04
Std. Deviation12.2516.03
Alpha0.12-4.11
Beta0.861.1
Sharpe Ratio1.010.75
Treynor Ratio14.3310.3

The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Mean Return of 1.09 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 Alpha of 0.12.

The iShares Russell Mid-Cap Value ETF (IWS) has a Beta of 1.1 with a R-squared of 87.04 and a Mean Return of 1.06. Its Standard Deviation is 16.03 while IWS’s Sharpe Ratio is 0.75. Furthermore, the fund has a Alpha of -4.11 and a Treynor Ratio of 10.3.

VIG’s Mean Return is 0.03 points higher than that of IWS and its R-squared is 5.16 points higher. With a Standard Deviation of 12.25, VIG is slightly less volatile than IWS. The Alpha and Beta of VIG are 4.23 points higher and 0.24 points lower than IWS’s Alpha and Beta.

Performance

Annual Returns

VIG vs. IWS - Annual Returns

YearVIGIWS
202015.46%4.76%
201929.71%26.78%
2018-2.02%-12.36%
201722.22%13.1%
201611.84%19.69%
2015-1.95%-4.93%
201410.06%14.49%
201328.99%33.11%
201211.61%18.27%
20116.21%-1.55%
201014.67%24.46%

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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

VIG vs. IWS - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VIG$10,000$37,95113.35%
IWS$10,000$33,08312.35%

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 IWS, the end total would have been $33,083. This equates to a $23,083 profit over 11 years and a compound annual growth rate (CAGR) of 12.35%.

VIG’s CAGR is 1.00 percentage points higher than that of IWS and as a result, would have yielded $4,868 more on a $10,000 investment. Thus, VIG outperformed IWS by 1.00% annually.


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