The iShares MSCI USA Value Factor ETF (VLUE) and the iShares Russell Mid-Cap Value ETF (IWS) are both among the Top 100 ETFs. VLUE is a iShares Large Value fund and IWS is a iShares Mid-Cap Value fund. So, what’s the difference between VLUE and IWS? And which fund is better?
The expense ratio of VLUE is 0.08 percentage points lower than IWS’s (0.15% vs. 0.23%). VLUE also has a higher exposure to the technology sector and a lower standard deviation. Overall, VLUE has provided lower returns than IWS over the past 7 years.
In this article, we’ll compare VLUE vs. IWS. We’ll look at industry exposure and holdings, as well as at their performance and risk metrics. Moreover, I’ll also discuss VLUE’s and IWS’s portfolio growth, annual returns, and fund composition and examine how these affect their overall returns.
Summary
| VLUE | IWS | |
| Name | iShares MSCI USA Value Factor ETF | iShares Russell Mid-Cap Value ETF |
| Category | Large Value | Mid-Cap Value |
| Issuer | iShares | iShares |
| AUM | 15.95B | 14.24B |
| Avg. Return | 8.91% | 12.35% |
| Div. Yield | 1.89% | 1.34% |
| Expense Ratio | 0.15% | 0.23% |
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 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%.
VLUE’s dividend yield is 0.55% higher than that of IWS (1.89% vs. 1.34%). Also, VLUE yielded on average 3.44% less per year over the past decade (8.91% vs. 12.35%). The expense ratio of VLUE is 0.08 percentage points lower than IWS’s (0.15% vs. 0.23%).
Fund Composition
Industry Exposure
| VLUE | IWS | |
| Technology | 26.89% | 11.39% |
| Industrials | 9.14% | 14.6% |
| Energy | 2.42% | 4.71% |
| Communication Services | 10.39% | 4.08% |
| Utilities | 2.68% | 6.97% |
| Healthcare | 14.31% | 8.56% |
| Consumer Defensive | 7.22% | 4.76% |
| Real Estate | 3.19% | 11.71% |
| Financial Services | 10.96% | 15.75% |
| Consumer Cyclical | 10.66% | 12.07% |
| Basic Materials | 2.14% | 5.4% |
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 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%.
VLUE is 15.50% more exposed to the Technology sector than IWS (26.89% vs 11.39%). VLUE’s exposure to Healthcare and Financial Services stocks is 5.75% higher and 4.79% lower respectively (14.31% vs. 8.56% and 10.96% vs. 15.75%). In total, Energy, Utilities, and Real Estate also make up 15.10% less of the fund’s holdings compared to IWS (8.29% vs. 23.39%).
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%.
| IWS Holdings | Weight |
| Twitter Inc | 0.69% |
| Marvell Technology Inc | 0.69% |
| IHS Markit Ltd | 0.62% |
| Prudential Financial Inc | 0.56% |
| Otis Worldwide Corp Ordinary Shares | 0.54% |
| International Flavors & Fragrances Inc | 0.53% |
| Xcel Energy Inc | 0.52% |
| Motorola Solutions Inc | 0.52% |
| Aptiv PLC | 0.52% |
| Aflac Inc | 0.52% |
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
| VLUE | IWS | |
| Mean Return | 0 | 1.06 |
| R-squared | 0 | 87.04 |
| Std. Deviation | 0 | 16.03 |
| Alpha | 0 | -4.11 |
| Beta | 0 | 1.1 |
| Sharpe Ratio | 0 | 0.75 |
| Treynor Ratio | 0 | 10.3 |
The iShares MSCI USA Value Factor ETF (VLUE) has a Mean Return of 0 with a Beta of 0 and a R-squared of 0. Its Standard Deviation is 0 while VLUE’s Alpha is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Sharpe Ratio of 0.
The iShares Russell Mid-Cap Value ETF (IWS) has a Beta of 1.1 with a Mean Return of 1.06 and a Standard Deviation of 16.03. Its R-squared is 87.04 while IWS’s Alpha is -4.11. Furthermore, the fund has a Treynor Ratio of 10.3 and a Sharpe Ratio of 0.75.
VLUE’s Mean Return is 1.06 points lower than that of IWS and its R-squared is 87.04 points lower. With a Standard Deviation of 0, VLUE is slightly less volatile than IWS. The Alpha and Beta of VLUE are 4.11 points higher and 1.10 points lower than IWS’s Alpha and Beta.
Performance
Annual Returns
| Year | VLUE | IWS |
| 2020 | -0.32% | 4.76% |
| 2019 | 27.47% | 26.78% |
| 2018 | -11.18% | -12.36% |
| 2017 | 21.97% | 13.1% |
| 2016 | 15.68% | 19.69% |
| 2015 | -3.54% | -4.93% |
| 2014 | 12.29% | 14.49% |
| 2013 | 0.0% | 33.11% |
| 2012 | 0.0% | 18.27% |
| 2011 | 0.0% | -1.55% |
| 2010 | 0.0% | 24.46% |
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 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
| Fund | Initial Balance | Final Balance | CAGR |
| VLUE | $10,000 | $17,247 | 8.91% |
| IWS | $10,000 | $17,150 | 12.35% |
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 IWS, the end total would have been $17,150. This equates to a $7,150 profit over 7 years and a compound annual growth rate (CAGR) of 12.35%.
VLUE’s CAGR is 3.44 percentage points lower than that of IWS and as a result, would have yielded $97 more on a $10,000 investment. Thus, VLUE performed worse than IWS by 3.44% annually.
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