The Vanguard S&P 500 ETF (VOO) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. VOO is a Vanguard Large Blend fund and IWN is a iShares Small Value fund. So, what’s the difference between VOO and IWN? And which fund is better?
The expense ratio of VOO is 0.21 percentage points lower than IWN’s (0.03% vs. 0.24%). VOO also has a higher exposure to the technology sector and a lower standard deviation. Overall, VOO has provided higher returns than IWN over the past ten years.
In this article, we’ll compare VOO vs. IWN. We’ll look at fund composition and annual returns, as well as at their portfolio growth and performance. Moreover, I’ll also discuss VOO’s and IWN’s risk metrics, industry exposure, and holdings and examine how these affect their overall returns.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
Summary
| VOO | IWN | |
| Name | Vanguard S&P 500 ETF | iShares Russell 2000 Value ETF |
| Category | Large Blend | Small Value |
| Issuer | Vanguard | iShares |
| AUM | 753.41B | 15.48B |
| Avg. Return | 14.45% | 10.96% |
| Div. Yield | 1.34% | 1.26% |
| Expense Ratio | 0.03% | 0.24% |
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 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%.
VOO’s dividend yield is 0.08% higher than that of IWN (1.34% vs. 1.26%). Also, VOO yielded on average 3.49% more per year over the past decade (14.45% vs. 10.96%). The expense ratio of VOO is 0.21 percentage points lower than IWN’s (0.03% vs. 0.24%).
FYI: The best way I've found to invest is through M1 Finance. It's free and you even get an instant line of credit and 100$! Have a look here (link to M1 Finance).
Fund Composition
Industry Exposure
| VOO | IWN | |
| Technology | 24.24% | 6.02% |
| Industrials | 8.86% | 14.58% |
| Energy | 2.84% | 5.84% |
| Communication Services | 11.14% | 4.17% |
| Utilities | 2.43% | 4.69% |
| Healthcare | 13.1% | 10.94% |
| Consumer Defensive | 6.32% | 3.77% |
| Real Estate | 2.58% | 14.36% |
| Financial Services | 14.2% | 22.97% |
| Consumer Cyclical | 12.01% | 8.39% |
| Basic Materials | 2.27% | 4.29% |
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 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%.
VOO is 18.22% more exposed to the Technology sector than IWN (24.24% vs 6.02%). VOO’s exposure to Financial Services and Healthcare stocks is 8.77% lower and 2.16% higher respectively (14.2% vs. 22.97% and 13.1% vs. 10.94%). In total, Utilities, Real Estate, and Energy also make up 17.04% less of the fund’s holdings compared to IWN (7.85% vs. 24.89%).
Holdings
| VOO Holdings | Weight |
| Apple Inc | 5.92% |
| Microsoft Corp | 5.62% |
| Amazon.com Inc | 4.06% |
| Facebook Inc Class A | 2.29% |
| Alphabet Inc Class A | 2.02% |
| Alphabet Inc Class C | 1.97% |
| Tesla Inc | 1.44% |
| Berkshire Hathaway Inc Class B | 1.44% |
| NVIDIA Corp | 1.37% |
| JPMorgan Chase & Co | 1.3% |
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%.
| IWN Holdings | Weight |
| AMC Entertainment Holdings Inc Class A | 1.06% |
| Tenet Healthcare Corp | 0.47% |
| Stag Industrial Inc | 0.47% |
| Ovintiv Inc | 0.45% |
| EMCOR Group Inc | 0.42% |
| Valley National Bancorp | 0.37% |
| Chesapeake Energy Corp Ordinary Shares – New | 0.37% |
| Agree Realty Corp | 0.36% |
| Macy’s Inc | 0.35% |
| Essent Group Ltd | 0.35% |
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%.
Performance
Annual Returns
| Year | VOO | IWN |
| 2020 | 18.35% | 4.5% |
| 2019 | 31.46% | 22.17% |
| 2018 | -4.42% | -12.94% |
| 2017 | 21.78% | 7.73% |
| 2016 | 11.93% | 31.64% |
| 2015 | 1.35% | -7.53% |
| 2014 | 13.63% | 4.13% |
| 2013 | 32.33% | 34.3% |
| 2012 | 15.98% | 17.92% |
| 2011 | 2.09% | -5.64% |
| 2010 | 0.0% | 24.29% |
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 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
| Fund | Initial Balance | Final Balance | CAGR |
| VOO | $10,000 | $36,575 | 14.45% |
| IWN | $10,000 | $22,680 | 10.96% |
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 IWN, the end total would have been $22,680. This equates to a $12,680 profit over 10 years and a compound annual growth rate (CAGR) of 10.96%.
VOO’s CAGR is 3.49 percentage points higher than that of IWN and as a result, would have yielded $13,895 more on a $10,000 investment. Thus, VOO outperformed IWN by 3.49% annually.
Current recommendations:
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
