VO vs. IWP: What’s The Difference?

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

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

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

Summary

VO IWP
Name Vanguard Mid-Cap Index Fund ETF Shares iShares Russell Mid-Cap Growth ETF
Category Mid-Cap Blend Mid-Cap Growth
Issuer Vanguard iShares
AUM 154.08B 15.7B
Avg. Return 14.34% 16.75%
Div. Yield 1.23% 0.26%
Expense Ratio 0.04% 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 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%.

VO’s dividend yield is 0.97% higher than that of IWP (1.23% vs. 0.26%). Also, VO yielded on average 2.41% less per year over the past decade (14.34% vs. 16.75%). The expense ratio of VO is 0.20 percentage points lower than IWP’s (0.04% vs. 0.24%).

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Fund Composition

Industry Exposure

VO vs. IWP - Industry Exposure

VO IWP
Technology 22.01% 33.88%
Industrials 11.92% 14.09%
Energy 3.82% 1.51%
Communication Services 5.61% 6.32%
Utilities 5.12% 0.16%
Healthcare 13.03% 16.79%
Consumer Defensive 3.25% 2.32%
Real Estate 8.67% 2.46%
Financial Services 11.08% 4.52%
Consumer Cyclical 12.12% 16.09%
Basic Materials 3.36% 1.86%

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 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%.

VO is 11.87% less exposed to the Technology sector than IWP (22.01% vs 33.88%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 3.76% lower and 3.97% lower respectively (13.03% vs. 16.79% and 12.12% vs. 16.09%). In total, Basic Materials, Energy, and Utilities also make up 8.77% more of the fund’s holdings compared to IWP (12.30% vs. 3.53%).

Holdings

VO - Holdings

VO Holdings Weight
IDEXX Laboratories Inc 0.78%
DocuSign Inc 0.75%
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%
Centene Corp 0.62%
Aptiv PLC 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%.

IWP - Holdings

IWP Holdings Weight
IDEXX Laboratories Inc 1.3%
DocuSign Inc 1.3%
Roku Inc Class A 1.29%
Match Group Inc 1.06%
Chipotle Mexican Grill Inc 1.06%
Pinterest Inc 1.05%
Veeva Systems Inc Class A 1.04%
Palantir Technologies Inc Ordinary Shares – Class A 1.04%
Lululemon Athletica Inc 1.01%
DexCom Inc 1.0%

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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Risk Analysis

VO IWP
Mean Return 1.14 1.27
R-squared 92.22 87.01
Std. Deviation 15.65 16.05
Alpha -2.71 -1.03
Beta 1.11 1.1
Sharpe Ratio 0.83 0.91
Treynor Ratio 11.32 12.98

The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Alpha of -2.71 with a R-squared of 92.22 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 Mean Return of 1.14.

The iShares Russell Mid-Cap Growth ETF (IWP) has a Beta of 1.1 with a Mean Return of 1.27 and a R-squared of 87.01. Its Treynor Ratio is 12.98 while IWP’s Standard Deviation is 16.05. Furthermore, the fund has a Alpha of -1.03 and a Sharpe Ratio of 0.91.

VO’s Mean Return is 0.13 points lower than that of IWP and its R-squared is 5.21 points higher. With a Standard Deviation of 15.65, VO is slightly less volatile than IWP. The Alpha and Beta of VO are 1.68 points lower and 0.01 points higher than IWP’s Alpha and Beta.

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Performance

Annual Returns

VO vs. IWP - Annual Returns

Year VO IWP
2020 18.22% 35.29%
2019 31.04% 35.14%
2018 -9.21% -4.95%
2017 19.25% 24.98%
2016 11.23% 7.15%
2015 -1.34% -0.39%
2014 13.76% 11.68%
2013 35.15% 35.44%
2012 15.98% 15.62%
2011 -1.96% -1.82%
2010 25.57% 26.1%

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 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.

Portfolio Growth

VO vs. IWP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VO $10,000 $40,404 14.34%
IWP $10,000 $50,191 16.75%

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 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%.

VO’s CAGR is 2.41 percentage points lower than that of IWP and as a result, would have yielded $9,787 less on a $10,000 investment. Thus, VO performed worse than IWP by 2.41% annually.


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