The iShares MSCI USA Value Factor ETF (VLUE) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. VLUE is a iShares Large Value fund and IWN is a iShares Small Value fund. So, what’s the difference between VLUE and IWN? And which fund is better?
The expense ratio of VLUE is 0.09 percentage points lower than IWN’s (0.15% vs. 0.24%). VLUE also has a higher exposure to the technology sector and a lower standard deviation. Overall, VLUE has provided lower returns than IWN over the past 7 years.
In this article, we’ll compare VLUE vs. IWN. We’ll look at holdings and fund composition, as well as at their risk metrics and performance. Moreover, I’ll also discuss VLUE’s and IWN’s industry exposure, annual returns, and portfolio growth and examine how these affect their overall returns.
Summary
| VLUE | IWN | |
| Name | iShares MSCI USA Value Factor ETF | iShares Russell 2000 Value ETF |
| Category | Large Value | Small Value |
| Issuer | iShares | iShares |
| AUM | 15.95B | 15.48B |
| Avg. Return | 8.91% | 10.96% |
| Div. Yield | 1.89% | 1.26% |
| Expense Ratio | 0.15% | 0.24% |
The iShares MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.
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%.
VLUE’s dividend yield is 0.63% higher than that of IWN (1.89% vs. 1.26%). Also, VLUE yielded on average 2.05% less per year over the past decade (8.91% vs. 10.96%). The expense ratio of VLUE is 0.09 percentage points lower than IWN’s (0.15% vs. 0.24%).
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Fund Composition
Industry Exposure
| VLUE | IWN | |
| Technology | 26.89% | 6.02% |
| Industrials | 9.14% | 14.58% |
| Energy | 2.42% | 5.84% |
| Communication Services | 10.39% | 4.17% |
| Utilities | 2.68% | 4.69% |
| Healthcare | 14.31% | 10.94% |
| Consumer Defensive | 7.22% | 3.77% |
| Real Estate | 3.19% | 14.36% |
| Financial Services | 10.96% | 22.97% |
| Consumer Cyclical | 10.66% | 8.39% |
| Basic Materials | 2.14% | 4.29% |
The iShares MSCI USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.
VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.
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%.
VLUE is 20.87% more exposed to the Technology sector than IWN (26.89% vs 6.02%). VLUE’s exposure to Healthcare and Financial Services stocks is 3.37% higher and 12.01% lower respectively (14.31% vs. 10.94% and 10.96% vs. 22.97%). In total, Energy, Utilities, and Real Estate also make up 16.60% less of the fund’s holdings compared to IWN (8.29% vs. 24.89%).
Holdings
| VLUE Holdings | Weight |
| AT&T Inc | 7.13% |
| Intel Corp | 6.14% |
| General Motors Co | 3.19% |
| Micron Technology Inc | 3.14% |
| Cisco Systems Inc | 3.05% |
| International Business Machines Corp | 2.76% |
| Target Corp | 2.38% |
| Citigroup Inc | 2.32% |
| Ford Motor Co | 2.23% |
| Pfizer Inc | 2.17% |
VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.
International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.
| 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%.
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Risk Analysis
| VLUE | IWN | |
| Mean Return | 0 | 1.01 |
| R-squared | 0 | 72.64 |
| Std. Deviation | 0 | 19.28 |
| Alpha | 0 | -6.32 |
| Beta | 0 | 1.21 |
| Sharpe Ratio | 0 | 0.59 |
| Treynor Ratio | 0 | 8.3 |
The iShares MSCI USA Value Factor ETF (VLUE) has a Treynor Ratio of 0 with a Alpha of 0 and a Sharpe Ratio of 0. Its Standard Deviation is 0 while VLUE’s Mean Return is 0. Furthermore, the fund has a R-squared of 0 and a Beta of 0.
The iShares Russell 2000 Value ETF (IWN) has a Alpha of -6.32 with a Sharpe Ratio of 0.59 and a Treynor Ratio of 8.3. Its Standard Deviation is 19.28 while IWN’s R-squared is 72.64. Furthermore, the fund has a Mean Return of 1.01 and a Beta of 1.21.
VLUE’s Mean Return is 1.01 points lower than that of IWN and its R-squared is 72.64 points lower. With a Standard Deviation of 0, VLUE is slightly less volatile than IWN. The Alpha and Beta of VLUE are 6.32 points higher and 1.21 points lower than IWN’s Alpha and Beta.
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Performance
Annual Returns
| Year | VLUE | IWN |
| 2020 | -0.32% | 4.5% |
| 2019 | 27.47% | 22.17% |
| 2018 | -11.18% | -12.94% |
| 2017 | 21.97% | 7.73% |
| 2016 | 15.68% | 31.64% |
| 2015 | -3.54% | -7.53% |
| 2014 | 12.29% | 4.13% |
| 2013 | 0.0% | 34.3% |
| 2012 | 0.0% | 17.92% |
| 2011 | 0.0% | -5.64% |
| 2010 | 0.0% | 24.29% |
VLUE had its best year in 2019 with an annual return of 27.47%. VLUE’s worst year over the past decade yielded -11.18% and occurred in 2018. In most years the iShares MSCI USA Value Factor ETF provided moderate returns such as in 2012, 2011, and 2010 where annual returns amounted to 0.0%, 0.0%, and 0.0% 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 |
| VLUE | $10,000 | $17,247 | 8.91% |
| IWN | $10,000 | $15,177 | 10.96% |
A $10,000 investment in VLUE would have resulted in a final balance of $17,247. This is a profit of $7,247 over 7 years and amounts to a compound annual growth rate (CAGR) of 8.91%.
With a $10,000 investment in IWN, the end total would have been $15,177. This equates to a $5,177 profit over 7 years and a compound annual growth rate (CAGR) of 10.96%.
VLUE’s CAGR is 2.05 percentage points lower than that of IWN and as a result, would have yielded $2,070 more on a $10,000 investment. Thus, VLUE performed worse than IWN by 2.05% annually.
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