VO vs. IWR: What’s The Difference?

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

The expense ratio of VO is 0.15 percentage points lower than IWR’s (0.04% vs. 0.19%). VO also has a higher exposure to the technology sector and a lower standard deviation. Overall, VO has provided higher returns than IWR over the past ten years.

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

Summary

VO IWR
Name Vanguard Mid-Cap Index Fund ETF Shares iShares Russell Mid-Cap ETF
Category Mid-Cap Blend Mid-Cap Blend
Issuer Vanguard iShares
AUM 154.08B 29.84B
Avg. Return 14.34% 14.15%
Div. Yield 1.23% 0.99%
Expense Ratio 0.04% 0.19%

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 ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% with an expense ratio of 0.19%.

VO’s dividend yield is 0.24% higher than that of IWR (1.23% vs. 0.99%). Also, VO yielded on average 0.18% more per year over the past decade (14.34% vs. 14.15%). The expense ratio of VO is 0.15 percentage points lower than IWR’s (0.04% vs. 0.19%).

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Fund Composition

Industry Exposure

VO vs. IWR - Industry Exposure

VO IWR
Technology 22.01% 19.67%
Industrials 11.92% 14.54%
Energy 3.82% 3.48%
Communication Services 5.61% 4.64%
Utilities 5.12% 4.46%
Healthcare 13.03% 11.76%
Consumer Defensive 3.25% 3.82%
Real Estate 8.67% 8.31%
Financial Services 11.08% 11.64%
Consumer Cyclical 12.12% 13.59%
Basic Materials 3.36% 4.1%

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 ETF (IWR) has the most exposure to the Technology sector at 19.67%. This is followed by Industrials and Consumer Cyclical at 14.54% and 13.59% respectively. Consumer Defensive (3.82%), Basic Materials (4.1%), and Utilities (4.46%) only make up 12.38% of the fund’s total assets.

IWR’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Healthcare, and Consumer Cyclical stocks at 4.64%, 8.31%, 11.64%, 11.76%, and 13.59%.

VO is 2.34% more exposed to the Technology sector than IWR (22.01% vs 19.67%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 1.27% higher and 1.47% lower respectively (13.03% vs. 11.76% and 12.12% vs. 13.59%). In total, Basic Materials, Energy, and Utilities also make up 0.26% more of the fund’s holdings compared to IWR (12.30% vs. 12.04%).

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%.

IWR - Holdings

IWR Holdings Weight
IDEXX Laboratories Inc 0.51%
DocuSign Inc 0.51%
Twitter Inc 0.48%
Chipotle Mexican Grill Inc 0.47%
Roku Inc Class A 0.44%
Marvell Technology Inc 0.44%
DexCom Inc 0.44%
Trane Technologies PLC 0.43%
MSCI Inc 0.43%
Carrier Global Corp Ordinary Shares 0.43%

IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.

Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.

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Risk Analysis

VO IWR
Mean Return 1.14 1.17
R-squared 92.22 91.52
Std. Deviation 15.65 15.66
Alpha -2.71 -2.8
Beta 1.11 1.11
Sharpe Ratio 0.83 0.86
Treynor Ratio 11.32 11.72

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

The iShares Russell Mid-Cap ETF (IWR) has a Alpha of -2.8 with a R-squared of 91.52 and a Treynor Ratio of 11.72. Its Beta is 1.11 while IWR’s Mean Return is 1.17. Furthermore, the fund has a Standard Deviation of 15.66 and a Sharpe Ratio of 0.86.

VO’s Mean Return is 0.03 points lower than that of IWR and its R-squared is 0.70 points higher. With a Standard Deviation of 15.65, VO is slightly less volatile than IWR. The Alpha and Beta of VO are 0.09 points higher and 0.00 points lower than IWR’s Alpha and Beta.

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Performance

Annual Returns

VO vs. IWR - Annual Returns

Year VO IWR
2020 18.22% 16.91%
2019 31.04% 30.31%
2018 -9.21% -9.13%
2017 19.25% 18.32%
2016 11.23% 13.58%
2015 -1.34% -2.57%
2014 13.76% 13.03%
2013 35.15% 34.5%
2012 15.98% 17.13%
2011 -1.96% -1.67%
2010 25.57% 25.25%

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 IWR, returning 34.5% on an annual basis. The poorest year for IWR in the last ten years was 2018, with a yield of -9.13%. Most years the iShares Russell Mid-Cap ETF has given investors modest returns, such as in 2016, 2020, and 2012, when gains were 13.58%, 16.91%, and 17.13% respectively.

Portfolio Growth

VO vs. IWR - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VO $10,000 $40,404 14.34%
IWR $10,000 $39,751 14.15%

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 IWR, the end total would have been $39,751. This equates to a $29,751 profit over 11 years and a compound annual growth rate (CAGR) of 14.15%.

VO’s CAGR is 0.18 percentage points higher than that of IWR and as a result, would have yielded $653 more on a $10,000 investment. Thus, VO outperformed IWR by 0.18% annually.


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