The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the iShares S&P 500 Growth ETF (IVW) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and IVW is a iShares Large Growth fund. So, what’s the difference between VO and IVW? And which fund is better?
The expense ratio of VO is 0.14 percentage points lower than IVW’s (0.04% vs. 0.18%). VO also has a lower exposure to the technology sector and a higher standard deviation. Overall, VO has provided lower returns than IVW over the past ten years.
In this article, we’ll compare VO vs. IVW. We’ll look at fund composition and holdings, as well as at their industry exposure and performance. Moreover, I’ll also discuss VO’s and IVW’s annual returns, risk metrics, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Mid-Cap Index Fund ETF Shares||iShares S&P 500 Growth ETF|
|Category||Mid-Cap Blend||Large Growth|
The Vanguard Mid-Cap Index Fund ETF Shares (VO) is a Mid-Cap Blend fund that is issued by Vanguard. It currently has 154.08B total assets under management and has yielded an average annual return of 14.34% over the past 10 years. The fund has a dividend yield of 1.23% with an expense ratio of 0.04%.
The iShares S&P 500 Growth ETF (IVW) is a Large Growth fund that is issued by iShares. It currently has 35.72B total assets under management and has yielded an average annual return of 16.74% over the past 10 years. The fund has a dividend yield of 0.61% with an expense ratio of 0.18%.
VO’s dividend yield is 0.62% higher than that of IVW (1.23% vs. 0.61%). Also, VO yielded on average 2.40% less per year over the past decade (14.34% vs. 16.74%). The expense ratio of VO is 0.14 percentage points lower than IVW’s (0.04% vs. 0.18%).
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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has the most exposure to the Technology sector at 22.01%. This is followed by Healthcare and Consumer Cyclical at 13.03% and 12.12% respectively. Basic Materials (3.36%), Energy (3.82%), and Utilities (5.12%) only make up 12.30% of the fund’s total assets.
VO’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Industrials, and Consumer Cyclical stocks at 5.61%, 8.67%, 11.08%, 11.92%, and 12.12%.
The iShares S&P 500 Growth ETF (IVW) has the most exposure to the Technology sector at 37.8%. This is followed by Communication Services and Consumer Cyclical at 15.44% and 15.25% respectively. Utilities (0.47%), Real Estate (1.11%), and Basic Materials (1.65%) only make up 3.23% of the fund’s total assets.
IVW’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 3.84%, 5.72%, 6.78%, 11.88%, and 15.25%.
VO is 15.79% less exposed to the Technology sector than IVW (22.01% vs 37.8%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 1.15% higher and 3.13% lower respectively (13.03% vs. 11.88% and 12.12% vs. 15.25%). In total, Basic Materials, Energy, and Utilities also make up 10.12% more of the fund’s holdings compared to IVW (12.30% vs. 2.18%).
|IDEXX Laboratories Inc||0.78%|
|Marvell Technology Inc||0.68%|
|IQVIA Holdings Inc||0.68%|
|Chipotle Mexican Grill Inc||0.63%|
|Veeva Systems Inc Class A||0.62%|
|Digital Realty Trust Inc||0.62%|
|Carrier Global Corp Ordinary Shares||0.61%|
VO’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Marvell Technology Inc, IQVIA Holdings Inc, and Chipotle Mexican Grill Inc at 0.78%, 0.75%, 0.68%, 0.68%, and 0.63%.
Veeva Systems Inc Class A (0.62%), Digital Realty Trust Inc (0.62%), and Centene Corp (0.62%) have a slightly smaller but still significant weight. Aptiv PLC and Carrier Global Corp Ordinary Shares are also represented in the VO’s holdings at 0.62% and 0.61%.
|Facebook Inc Class A||4.28%|
|Alphabet Inc Class A||4.06%|
|Alphabet Inc Class C||3.86%|
|PayPal Holdings Inc||1.62%|
IVW’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 11.46%, 10.75%, 7.14%, 4.28%, and 4.06%.
Alphabet Inc Class C (3.86%), Tesla Inc (2.65%), and NVIDIA Corp (2.43%) have a slightly smaller but still significant weight. PayPal Holdings Inc and Adobe Inc are also represented in the IVW’s holdings at 1.62% and 1.49%.
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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Beta of 1.11 with a R-squared of 92.22 and a Sharpe Ratio of 0.83. Its Treynor Ratio is 11.32 while VO’s Standard Deviation is 15.65. Furthermore, the fund has a Mean Return of 1.14 and a Alpha of -2.71.
The iShares S&P 500 Growth ETF (IVW) has a Treynor Ratio of 17.24 with a Sharpe Ratio of 1.21 and a Mean Return of 1.44. Its Beta is 0.98 while IVW’s R-squared is 93.82. Furthermore, the fund has a Standard Deviation of 13.77 and a Alpha of 2.19.
VO’s Mean Return is 0.30 points lower than that of IVW and its R-squared is 1.60 points lower. With a Standard Deviation of 15.65, VO is slightly more volatile than IVW. The Alpha and Beta of VO are 4.90 points lower and 0.13 points higher than IVW’s Alpha and Beta.
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VO had its best year in 2013 with an annual return of 35.15%. VO’s worst year over the past decade yielded -9.21% and occurred in 2018. In most years the Vanguard Mid-Cap Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2020 where annual returns amounted to 13.76%, 15.98%, and 18.22% respectively.
The year 2020 was the strongest year for IVW, returning 33.21% on an annual basis. The poorest year for IVW in the last ten years was 2018, with a yield of -0.17%. Most years the iShares S&P 500 Growth ETF has given investors modest returns, such as in 2012, 2014, and 2010, when gains were 14.39%, 14.67%, and 14.84% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VO would have resulted in a final balance of $40,404. This is a profit of $30,404 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.34%.
With a $10,000 investment in IVW, the end total would have been $51,915. This equates to a $41,915 profit over 11 years and a compound annual growth rate (CAGR) of 16.74%.
VO’s CAGR is 2.40 percentage points lower than that of IVW and as a result, would have yielded $11,511 less on a $10,000 investment. Thus, VO performed worse than IVW by 2.40% annually.
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