The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the iShares Russell 1000 ETF (IWB) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and IWB is a iShares Large Blend fund. So, what’s the difference between VO and IWB? And which fund is better?
The expense ratio of VO is 0.11 percentage points lower than IWB’s (0.04% vs. 0.15%). VO also has a lower exposure to the technology sector and a higher standard deviation. Overall, VO has provided lower returns than IWB over the past ten years.
In this article, we’ll compare VO vs. IWB. We’ll look at fund composition and holdings, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss VO’s and IWB’s risk metrics, performance, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Mid-Cap Index Fund ETF Shares||iShares Russell 1000 ETF|
|Category||Mid-Cap Blend||Large Blend|
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 Russell 1000 ETF (IWB) is a Large Blend fund that is issued by iShares. It currently has 30.54B total assets under management and has yielded an average annual return of 14.64% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.15%.
VO’s dividend yield is 0.09% higher than that of IWB (1.23% vs. 1.14%). Also, VO yielded on average 0.30% less per year over the past decade (14.34% vs. 14.64%). The expense ratio of VO is 0.11 percentage points lower than IWB’s (0.04% vs. 0.15%).
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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 Russell 1000 ETF (IWB) has the most exposure to the Technology sector at 25.33%. This is followed by Financial Services and Healthcare at 13.64% and 13.35% respectively. Utilities (2.36%), Energy (2.44%), and Real Estate (3.34%) only make up 8.14% of the fund’s total assets.
IWB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.88%, 10.83%, 11.85%, and 13.35%.
VO is 3.32% less exposed to the Technology sector than IWB (22.01% vs 25.33%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 0.32% lower and 0.27% higher respectively (13.03% vs. 13.35% and 12.12% vs. 11.85%). In total, Basic Materials, Energy, and Utilities also make up 5.48% more of the fund’s holdings compared to IWB (12.30% vs. 6.82%).
|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||2.03%|
|Alphabet Inc Class A||1.93%|
|Alphabet Inc Class C||1.82%|
|Berkshire Hathaway Inc Class B||1.24%|
|JPMorgan Chase & Co||1.09%|
IWB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.45%, 5.11%, 3.43%, 2.03%, and 1.93%.
Alphabet Inc Class C (1.82%), Tesla Inc (1.27%), and Berkshire Hathaway Inc Class B (1.24%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the IWB’s holdings at 1.11% and 1.09%.
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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Alpha of -2.71 with a Standard Deviation of 15.65 and a Sharpe Ratio of 0.83. Its Treynor Ratio is 11.32 while VO’s R-squared is 92.22. Furthermore, the fund has a Mean Return of 1.14 and a Beta of 1.11.
The iShares Russell 1000 ETF (IWB) has a Treynor Ratio of 14.31 with a Alpha of -0.38 and a R-squared of 99.73. Its Beta is 1.02 while IWB’s Mean Return is 1.27. Furthermore, the fund has a Sharpe Ratio of 1.05 and a Standard Deviation of 13.87.
VO’s Mean Return is 0.13 points lower than that of IWB and its R-squared is 7.51 points lower. With a Standard Deviation of 15.65, VO is slightly more volatile than IWB. The Alpha and Beta of VO are 2.33 points lower and 0.09 points higher than IWB’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 2013 was the strongest year for IWB, returning 32.93% on an annual basis. The poorest year for IWB in the last ten years was 2018, with a yield of -4.91%. Most years the iShares Russell 1000 ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.08%, 15.94%, and 16.27% 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 IWB, the end total would have been $42,462. This equates to a $32,462 profit over 11 years and a compound annual growth rate (CAGR) of 14.64%.
VO’s CAGR is 0.30 percentage points lower than that of IWB and as a result, would have yielded $2,058 less on a $10,000 investment. Thus, VO performed worse than IWB by 0.30% annually.
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