The Vanguard Real Estate Index Fund ETF Shares (VNQ) and the iShares Russell Mid-Cap Growth ETF (IWP) are both among the Top 100 ETFs. VNQ is a Vanguard Real Estate fund and IWP is a iShares Mid-Cap Growth fund. So, what’s the difference between VNQ and IWP? And which fund is better?
The expense ratio of VNQ is 0.12 percentage points lower than IWP’s (0.12% vs. 0.24%). VNQ also has a higher exposure to the real estate sector and a higher standard deviation. Overall, VNQ has provided lower returns than IWP over the past ten years.
In this article, we’ll compare VNQ vs. IWP. We’ll look at risk metrics and portfolio growth, as well as at their performance and holdings. Moreover, I’ll also discuss VNQ’s and IWP’s fund composition, annual returns, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Real Estate Index Fund ETF Shares||iShares Russell Mid-Cap Growth ETF|
|Category||Real Estate||Mid-Cap Growth|
The Vanguard Real Estate Index Fund ETF Shares (VNQ) is a Real Estate fund that is issued by Vanguard. It currently has 77.34B total assets under management and has yielded an average annual return of 11.05% over the past 10 years. The fund has a dividend yield of 2.34% with an expense ratio of 0.12%.
The iShares Russell Mid-Cap Growth ETF (IWP) is a Mid-Cap Growth fund that is issued by iShares. It currently has 15.7B total assets under management and has yielded an average annual return of 16.75% over the past 10 years. The fund has a dividend yield of 0.26% with an expense ratio of 0.24%.
VNQ’s dividend yield is 2.08% higher than that of IWP (2.34% vs. 0.26%). Also, VNQ yielded on average 5.70% less per year over the past decade (11.05% vs. 16.75%). The expense ratio of VNQ is 0.12 percentage points lower than IWP’s (0.12% vs. 0.24%).
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The Vanguard Real Estate Index Fund ETF Shares (VNQ) has the most exposure to the Real Estate sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
VNQ’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
The iShares Russell Mid-Cap Growth ETF (IWP) has the most exposure to the Technology sector at 33.88%. This is followed by Healthcare and Consumer Cyclical at 16.79% and 16.09% respectively. Energy (1.51%), Basic Materials (1.86%), and Consumer Defensive (2.32%) only make up 5.69% of the fund’s total assets.
IWP’s mid-section with moderate exposure is comprised of Real Estate, Financial Services, Communication Services, Industrials, and Consumer Cyclical stocks at 2.46%, 4.52%, 6.32%, 14.09%, and 16.09%.
VNQ is 97.54% more exposed to the Real Estate sector than IWP (100.0% vs 2.46%). VNQ’s exposure to Technology and Industrials stocks is 33.88% lower and 14.09% lower respectively (0.0% vs. 33.88% and 0.0% vs. 14.09%). In total, Consumer Cyclical, Financial Services, and Consumer Defensive also make up 22.93% less of the fund’s holdings compared to IWP (0.00% vs. 22.93%).
|Vanguard Real Estate II Index||11.62%|
|American Tower Corp||7.24%|
|Crown Castle International Corp||5.01%|
|Simon Property Group Inc||2.52%|
|Digital Realty Trust Inc||2.49%|
|SBA Communications Corp||2.1%|
VNQ’s Top Holdings are Vanguard Real Estate II Index, American Tower Corp, Prologis Inc, Crown Castle International Corp, and Equinix Inc at 11.62%, 7.24%, 5.33%, 5.01%, and 4.3%.
Public Storage (2.85%), Simon Property Group Inc (2.52%), and Digital Realty Trust Inc (2.49%) have a slightly smaller but still significant weight. SBA Communications Corp and Welltower Inc are also represented in the VNQ’s holdings at 2.1% and 2.09%.
|IDEXX Laboratories Inc||1.3%|
|Roku Inc Class A||1.29%|
|Match Group Inc||1.06%|
|Chipotle Mexican Grill Inc||1.06%|
|Veeva Systems Inc Class A||1.04%|
|Palantir Technologies Inc Ordinary Shares – Class A||1.04%|
|Lululemon Athletica Inc||1.01%|
IWP’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Roku Inc Class A, Match Group Inc, and Chipotle Mexican Grill Inc at 1.3%, 1.3%, 1.29%, 1.06%, and 1.06%.
Pinterest Inc (1.05%), Veeva Systems Inc Class A (1.04%), and Palantir Technologies Inc Ordinary Shares – Class A (1.04%) have a slightly smaller but still significant weight. Lululemon Athletica Inc and DexCom Inc are also represented in the IWP’s holdings at 1.01% and 1.0%.
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The Vanguard Real Estate Index Fund ETF Shares (VNQ) has a Beta of 0.76 with a Treynor Ratio of 11.9 and a Sharpe Ratio of 0.62. Its R-squared is 44.4 while VNQ’s Standard Deviation is 16.13. Furthermore, the fund has a Alpha of 2.47 and a Mean Return of 0.89.
The iShares Russell Mid-Cap Growth ETF (IWP) has a Alpha of -1.03 with a Beta of 1.1 and a Mean Return of 1.27. Its R-squared is 87.01 while IWP’s Treynor Ratio is 12.98. Furthermore, the fund has a Standard Deviation of 16.05 and a Sharpe Ratio of 0.91.
VNQ’s Mean Return is 0.38 points lower than that of IWP and its R-squared is 42.61 points lower. With a Standard Deviation of 16.13, VNQ is slightly more volatile than IWP. The Alpha and Beta of VNQ are 3.50 points higher and 0.34 points lower than IWP’s Alpha and Beta.
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VNQ had its best year in 2014 with an annual return of 30.29%. VNQ’s worst year over the past decade yielded -5.95% and occurred in 2018. In most years the Vanguard Real Estate Index Fund ETF Shares provided moderate returns such as in 2017, 2016, and 2011 where annual returns amounted to 4.95%, 8.53%, and 8.62% respectively.
The year 2013 was the strongest year for IWP, returning 35.44% on an annual basis. The poorest year for IWP in the last ten years was 2018, with a yield of -4.95%. Most years the iShares Russell Mid-Cap Growth ETF has given investors modest returns, such as in 2014, 2012, and 2017, when gains were 11.68%, 15.62%, and 24.98% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VNQ would have resulted in a final balance of $29,506. This is a profit of $19,506 over 11 years and amounts to a compound annual growth rate (CAGR) of 11.05%.
With a $10,000 investment in IWP, the end total would have been $50,191. This equates to a $40,191 profit over 11 years and a compound annual growth rate (CAGR) of 16.75%.
VNQ’s CAGR is 5.70 percentage points lower than that of IWP and as a result, would have yielded $20,685 less on a $10,000 investment. Thus, VNQ performed worse than IWP by 5.70% annually.
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