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VOO vs. IWM: What’s The Difference?

The Vanguard S&P 500 ETF (VOO) and the iShares Russell 2000 ETF (IWM) are both among the Top 100 ETFs. VOO is a Vanguard Large Blend fund and IWM is a iShares Small Blend fund. So, what’s the difference between VOO and IWM? And which fund is better?

The expense ratio of VOO is 0.16 percentage points lower than IWM’s (0.03% vs. 0.19%). VOO also has a higher exposure to the technology sector and a lower standard deviation. Overall, VOO has provided higher returns than IWM over the past ten years.

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

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Summary

VOOIWM
NameVanguard S&P 500 ETFiShares Russell 2000 ETF
CategoryLarge BlendSmall Blend
IssuerVanguardiShares
AUM753.41B66.48B
Avg. Return14.45%13.52%
Div. Yield1.34%0.86%
Expense Ratio0.03%0.19%

The Vanguard S&P 500 ETF (VOO) is a Large Blend fund that is issued by Vanguard. It currently has 753.41B total assets under management and has yielded an average annual return of 14.45% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.03%.

The iShares Russell 2000 ETF (IWM) is a Small Blend fund that is issued by iShares. It currently has 66.48B total assets under management and has yielded an average annual return of 13.52% over the past 10 years. The fund has a dividend yield of 0.86% with an expense ratio of 0.19%.

VOO’s dividend yield is 0.48% higher than that of IWM (1.34% vs. 0.86%). Also, VOO yielded on average 0.93% more per year over the past decade (14.45% vs. 13.52%). The expense ratio of VOO is 0.16 percentage points lower than IWM’s (0.03% vs. 0.19%).

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Fund Composition

Industry Exposure

VOO vs. IWM - Industry Exposure

VOOIWM
Technology24.24%14.21%
Industrials8.86%14.78%
Energy2.84%3.74%
Communication Services11.14%3.79%
Utilities2.43%2.44%
Healthcare13.1%20.3%
Consumer Defensive6.32%3.65%
Real Estate2.58%8.59%
Financial Services14.2%13.76%
Consumer Cyclical12.01%10.99%
Basic Materials2.27%3.74%

The Vanguard S&P 500 ETF (VOO) has the most exposure to the Technology sector at 24.24%. This is followed by Financial Services and Healthcare at 14.2% and 13.1% respectively. Utilities (2.43%), Real Estate (2.58%), and Energy (2.84%) only make up 7.85% of the fund’s total assets.

VOO’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 6.32%, 8.86%, 11.14%, 12.01%, and 13.1%.

The iShares Russell 2000 ETF (IWM) has the most exposure to the Healthcare sector at 20.3%. This is followed by Industrials and Technology at 14.78% and 14.21% respectively. Consumer Defensive (3.65%), Basic Materials (3.74%), and Energy (3.74%) only make up 11.13% of the fund’s total assets.

IWM’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.79%, 8.59%, 10.99%, 13.76%, and 14.21%.

VOO is 10.03% more exposed to the Technology sector than IWM (24.24% vs 14.21%). VOO’s exposure to Financial Services and Healthcare stocks is 0.44% higher and 7.20% lower respectively (14.2% vs. 13.76% and 13.1% vs. 20.3%). In total, Utilities, Real Estate, and Energy also make up 6.92% less of the fund’s holdings compared to IWM (7.85% vs. 14.77%).

Holdings

VOO - Holdings

VOO HoldingsWeight
Apple Inc5.92%
Microsoft Corp5.62%
Amazon.com Inc4.06%
Facebook Inc Class A2.29%
Alphabet Inc Class A2.02%
Alphabet Inc Class C1.97%
Tesla Inc1.44%
Berkshire Hathaway Inc Class B1.44%
NVIDIA Corp1.37%
JPMorgan Chase & Co1.3%

VOO’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.92%, 5.62%, 4.06%, 2.29%, and 2.02%.

Alphabet Inc Class C (1.97%), Tesla Inc (1.44%), and Berkshire Hathaway Inc Class B (1.44%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VOO’s holdings at 1.37% and 1.3%.

IWM - Holdings

IWM HoldingsWeight
AMC Entertainment Holdings Inc Class A0.52%
Intellia Therapeutics Inc0.33%
Crocs Inc0.3%
BlackRock Cash Funds Treasury SL Agency0.29%
Tenet Healthcare Corp0.26%
Lattice Semiconductor Corp0.26%
Tetra Tech Inc0.25%
II-VI Inc0.25%
EastGroup Properties Inc0.24%
Arrowhead Pharmaceuticals Inc0.24%

IWM’s Top Holdings are AMC Entertainment Holdings Inc Class A, Intellia Therapeutics Inc, Crocs Inc, BlackRock Cash Funds Treasury SL Agency, and Tenet Healthcare Corp at 0.52%, 0.33%, 0.3%, 0.29%, and 0.26%.

Lattice Semiconductor Corp (0.26%), Tetra Tech Inc (0.25%), and II-VI Inc (0.25%) have a slightly smaller but still significant weight. EastGroup Properties Inc and Arrowhead Pharmaceuticals Inc are also represented in the IWM’s holdings at 0.24% and 0.24%.

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Performance

Annual Returns

VOO vs. IWM - Annual Returns

YearVOOIWM
202018.35%19.89%
201931.46%25.42%
2018-4.42%-11.02%
201721.78%14.66%
201611.93%21.36%
20151.35%-4.33%
201413.63%4.94%
201332.33%38.85%
201215.98%16.39%
20112.09%-4.19%
20100.0%26.76%

VOO had its best year in 2013 with an annual return of 32.33%. VOO’s worst year over the past decade yielded -4.42% and occurred in 2018. In most years the Vanguard S&P 500 ETF provided moderate returns such as in 2016, 2014, and 2012 where annual returns amounted to 11.93%, 13.63%, and 15.98% respectively.

The year 2013 was the strongest year for IWM, returning 38.85% on an annual basis. The poorest year for IWM in the last ten years was 2018, with a yield of -11.02%. Most years the iShares Russell 2000 ETF has given investors modest returns, such as in 2017, 2012, and 2020, when gains were 14.66%, 16.39%, and 19.89% respectively.

Portfolio Growth

VOO vs. IWM - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VOO$10,000$36,57514.45%
IWM$10,000$28,94113.52%

A $10,000 investment in VOO would have resulted in a final balance of $36,575. This is a profit of $26,575 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.45%.

With a $10,000 investment in IWM, the end total would have been $28,941. This equates to a $18,941 profit over 10 years and a compound annual growth rate (CAGR) of 13.52%.

VOO’s CAGR is 0.93 percentage points higher than that of IWM and as a result, would have yielded $7,634 more on a $10,000 investment. Thus, VOO outperformed IWM by 0.93% annually.


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