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VO vs. IWN: What’s The Difference?

The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and IWN is a iShares Small Value fund. So, what’s the difference between VO and IWN? And which fund is better?

The expense ratio of VO is 0.20 percentage points lower than IWN’s (0.04% vs. 0.24%). VO also has a higher exposure to the technology sector and a lower standard deviation. Overall, VO has provided higher returns than IWN over the past ten years.

In this article, we’ll compare VO vs. IWN. We’ll look at annual returns and industry exposure, as well as at their risk metrics and fund composition. Moreover, I’ll also discuss VO’s and IWN’s performance, portfolio growth, and holdings and examine how these affect their overall returns.

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Summary

VOIWN
NameVanguard Mid-Cap Index Fund ETF SharesiShares Russell 2000 Value ETF
CategoryMid-Cap BlendSmall Value
IssuerVanguardiShares
AUM154.08B15.48B
Avg. Return14.34%10.96%
Div. Yield1.23%1.26%
Expense Ratio0.04%0.24%

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 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%.

VO’s dividend yield is 0.03% lower than that of IWN (1.23% vs. 1.26%). Also, VO yielded on average 3.37% more per year over the past decade (14.34% vs. 10.96%). The expense ratio of VO is 0.20 percentage points lower than IWN’s (0.04% vs. 0.24%).

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Fund Composition

Industry Exposure

VO vs. IWN - Industry Exposure

VOIWN
Technology22.01%6.02%
Industrials11.92%14.58%
Energy3.82%5.84%
Communication Services5.61%4.17%
Utilities5.12%4.69%
Healthcare13.03%10.94%
Consumer Defensive3.25%3.77%
Real Estate8.67%14.36%
Financial Services11.08%22.97%
Consumer Cyclical12.12%8.39%
Basic Materials3.36%4.29%

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 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%.

VO is 15.99% more exposed to the Technology sector than IWN (22.01% vs 6.02%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 2.09% higher and 3.73% higher respectively (13.03% vs. 10.94% and 12.12% vs. 8.39%). In total, Basic Materials, Energy, and Utilities also make up 2.52% less of the fund’s holdings compared to IWN (12.30% vs. 14.82%).

Holdings

VO - Holdings

VO HoldingsWeight
IDEXX Laboratories Inc0.78%
DocuSign Inc0.75%
Marvell Technology Inc0.68%
IQVIA Holdings Inc0.68%
Chipotle Mexican Grill Inc0.63%
Veeva Systems Inc Class A0.62%
Digital Realty Trust Inc0.62%
Centene Corp0.62%
Aptiv PLC0.62%
Carrier Global Corp Ordinary Shares0.61%

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%.

IWN - Holdings

IWN HoldingsWeight
AMC Entertainment Holdings Inc Class A1.06%
Tenet Healthcare Corp0.47%
Stag Industrial Inc0.47%
Ovintiv Inc0.45%
EMCOR Group Inc0.42%
Valley National Bancorp0.37%
Chesapeake Energy Corp Ordinary Shares – New0.37%
Agree Realty Corp0.36%
Macy’s Inc0.35%
Essent Group Ltd0.35%

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

VOIWN
Mean Return1.141.01
R-squared92.2272.64
Std. Deviation15.6519.28
Alpha-2.71-6.32
Beta1.111.21
Sharpe Ratio0.830.59
Treynor Ratio11.328.3

The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Alpha of -2.71 with a Mean Return of 1.14 and a Standard Deviation of 15.65. Its Beta is 1.11 while VO’s Sharpe Ratio is 0.83. Furthermore, the fund has a Treynor Ratio of 11.32 and a R-squared of 92.22.

The iShares Russell 2000 Value ETF (IWN) has a Beta of 1.21 with a Sharpe Ratio of 0.59 and a R-squared of 72.64. Its Mean Return is 1.01 while IWN’s Standard Deviation is 19.28. Furthermore, the fund has a Treynor Ratio of 8.3 and a Alpha of -6.32.

VO’s Mean Return is 0.13 points higher than that of IWN and its R-squared is 19.58 points higher. With a Standard Deviation of 15.65, VO is slightly less volatile than IWN. The Alpha and Beta of VO are 3.61 points higher and 0.10 points lower than IWN’s Alpha and Beta.

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Performance

Annual Returns

VO vs. IWN - Annual Returns

YearVOIWN
202018.22%4.5%
201931.04%22.17%
2018-9.21%-12.94%
201719.25%7.73%
201611.23%31.64%
2015-1.34%-7.53%
201413.76%4.13%
201335.15%34.3%
201215.98%17.92%
2011-1.96%-5.64%
201025.57%24.29%

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 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

VO vs. IWN - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VO$10,000$40,40414.34%
IWN$10,000$28,18910.96%

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 IWN, the end total would have been $28,189. This equates to a $18,189 profit over 11 years and a compound annual growth rate (CAGR) of 10.96%.

VO’s CAGR is 3.37 percentage points higher than that of IWN and as a result, would have yielded $12,215 more on a $10,000 investment. Thus, VO outperformed IWN by 3.37% annually.


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