The Vanguard Value Index Fund ETF Shares (VTV) and the iShares Russell 1000 ETF (IWB) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and IWB is a iShares Large Blend fund. So, what’s the difference between VTV and IWB? And which fund is better?
The expense ratio of VTV is 0.11 percentage points lower than IWB’s (0.04% vs. 0.15%). VTV also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VTV has provided lower returns than IWB over the past ten years.
In this article, we’ll compare VTV vs. IWB. We’ll look at industry exposure and performance, as well as at their risk metrics and fund composition. Moreover, I’ll also discuss VTV’s and IWB’s annual returns, holdings, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Value Index Fund ETF Shares||iShares Russell 1000 ETF|
|Category||Large Value||Large Blend|
The Vanguard Value Index Fund ETF Shares (VTV) is a Large Value fund that is issued by Vanguard. It currently has 125.77B total assets under management and has yielded an average annual return of 12.07% over the past 10 years. The fund has a dividend yield of 2.15% with an expense ratio of 0.04%.
The iShares Russell 1000 ETF (IWB) is a Large Blend fund that is issued by iShares. It currently has 30.54B total assets under management and has yielded an average annual return of 14.64% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.15%.
VTV’s dividend yield is 1.01% higher than that of IWB (2.15% vs. 1.14%). Also, VTV yielded on average 2.56% less per year over the past decade (12.07% vs. 14.64%). The expense ratio of VTV is 0.11 percentage points lower than IWB’s (0.04% vs. 0.15%).
The Vanguard Value Index Fund ETF Shares (VTV) has the most exposure to the Financial Services sector at 22.81%. This is followed by Healthcare and Industrials at 19.84% and 12.61% respectively. Real Estate (3.01%), Consumer Cyclical (3.79%), and Utilities (5.37%) only make up 12.17% of the fund’s total assets.
VTV’s mid-section with moderate exposure is comprised of Communication Services, Energy, Technology, Consumer Defensive, and Industrials stocks at 5.49%, 5.59%, 7.86%, 10.72%, and 12.61%.
The iShares Russell 1000 ETF (IWB) has the most exposure to the Technology sector at 25.33%. This is followed by Financial Services and Healthcare at 13.64% and 13.35% respectively. Utilities (2.36%), Energy (2.44%), and Real Estate (3.34%) only make up 8.14% of the fund’s total assets.
IWB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.88%, 10.83%, 11.85%, and 13.35%.
VTV is 9.17% more exposed to the Financial Services sector than IWB (22.81% vs 13.64%). VTV’s exposure to Healthcare and Industrials stocks is 6.49% higher and 3.73% higher respectively (19.84% vs. 13.35% and 12.61% vs. 8.88%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 5.38% less of the fund’s holdings compared to IWB (12.17% vs. 17.55%).
|Berkshire Hathaway Inc Class B||2.98%|
|JPMorgan Chase & Co||2.82%|
|Johnson & Johnson||2.6%|
|UnitedHealth Group Inc||2.27%|
|Procter & Gamble Co||1.98%|
|Bank of America Corp||1.91%|
|Exxon Mobil Corp||1.6%|
|Comcast Corp Class A||1.57%|
|Verizon Communications Inc||1.32%|
VTV’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.98%, 2.82%, 2.6%, 2.27%, and 1.98%.
Bank of America Corp (1.91%), Exxon Mobil Corp (1.6%), and Comcast Corp Class A (1.57%) have a slightly smaller but still significant weight. Intel Corp and Verizon Communications Inc are also represented in the VTV’s holdings at 1.36% and 1.32%.
|Facebook Inc Class A||2.03%|
|Alphabet Inc Class A||1.93%|
|Alphabet Inc Class C||1.82%|
|Berkshire Hathaway Inc Class B||1.24%|
|JPMorgan Chase & Co||1.09%|
IWB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.45%, 5.11%, 3.43%, 2.03%, and 1.93%.
Alphabet Inc Class C (1.82%), Tesla Inc (1.27%), and Berkshire Hathaway Inc Class B (1.24%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the IWB’s holdings at 1.11% and 1.09%.
The Vanguard Value Index Fund ETF Shares (VTV) has a Mean Return of 1.05 with a Alpha of -1.92 and a Beta of 0.98. Its Sharpe Ratio is 0.87 while VTV’s Treynor Ratio is 11.94. Furthermore, the fund has a Standard Deviation of 13.78 and a R-squared of 92.61.
The iShares Russell 1000 ETF (IWB) has a Beta of 1.02 with a Standard Deviation of 13.87 and a R-squared of 99.73. Its Sharpe Ratio is 1.05 while IWB’s Treynor Ratio is 14.31. Furthermore, the fund has a Alpha of -0.38 and a Mean Return of 1.27.
VTV’s Mean Return is 0.22 points lower than that of IWB and its R-squared is 7.12 points lower. With a Standard Deviation of 13.78, VTV is slightly less volatile than IWB. The Alpha and Beta of VTV are 1.54 points lower and 0.04 points lower than IWB’s Alpha and Beta.
VTV had its best year in 2013 with an annual return of 33.03%. VTV’s worst year over the past decade yielded -5.39% and occurred in 2018. In most years the Vanguard Value Index Fund ETF Shares provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.19%, 14.45%, and 15.19% respectively.
The year 2013 was the strongest year for IWB, returning 32.93% on an annual basis. The poorest year for IWB in the last ten years was 2018, with a yield of -4.91%. Most years the iShares Russell 1000 ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.08%, 15.94%, and 16.27% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VTV would have resulted in a final balance of $33,163. This is a profit of $23,163 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.07%.
With a $10,000 investment in IWB, the end total would have been $42,462. This equates to a $32,462 profit over 11 years and a compound annual growth rate (CAGR) of 14.64%.
VTV’s CAGR is 2.56 percentage points lower than that of IWB and as a result, would have yielded $9,299 less on a $10,000 investment. Thus, VTV performed worse than IWB by 2.56% annually.
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