The Vanguard Value Index Fund ETF Shares (VTV) and the iShares Russell 1000 Value ETF (IWD) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and IWD is a iShares Large Value fund. So, what’s the difference between VTV and IWD? And which fund is better?
The expense ratio of VTV is 0.15 percentage points lower than IWD’s (0.04% vs. 0.19%). VTV also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VTV has provided higher returns than IWD over the past ten years.
In this article, we’ll compare VTV vs. IWD. We’ll look at industry exposure and fund composition, as well as at their portfolio growth and performance. Moreover, I’ll also discuss VTV’s and IWD’s annual returns, holdings, and risk metrics and examine how these affect their overall returns.
|Name||Vanguard Value Index Fund ETF Shares||iShares Russell 1000 Value ETF|
|Category||Large Value||Large Value|
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 Value ETF (IWD) is a Large Value fund that is issued by iShares. It currently has 54.1B total assets under management and has yielded an average annual return of 11.40% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.19%.
VTV’s dividend yield is 0.58% higher than that of IWD (2.15% vs. 1.57%). Also, VTV yielded on average 0.67% more per year over the past decade (12.07% vs. 11.40%). The expense ratio of VTV is 0.15 percentage points lower than IWD’s (0.04% vs. 0.19%).
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 Value ETF (IWD) has the most exposure to the Financial Services sector at 20.43%. This is followed by Healthcare and Industrials at 17.78% and 11.77% respectively. Energy (4.76%), Utilities (4.88%), and Real Estate (4.94%) only make up 14.58% of the fund’s total assets.
IWD’s mid-section with moderate exposure is comprised of Consumer Cyclical, Consumer Defensive, Communication Services, Technology, and Industrials stocks at 5.62%, 7.76%, 8.67%, 10.28%, and 11.77%.
VTV is 2.38% more exposed to the Financial Services sector than IWD (22.81% vs 20.43%). VTV’s exposure to Healthcare and Industrials stocks is 2.06% higher and 0.84% higher respectively (19.84% vs. 17.78% and 12.61% vs. 11.77%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 3.27% less of the fund’s holdings compared to IWD (12.17% vs. 15.44%).
|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%.
|Berkshire Hathaway Inc Class B||2.58%|
|JPMorgan Chase & Co||2.25%|
|Johnson & Johnson||2.24%|
|UnitedHealth Group Inc||1.78%|
|Procter & Gamble Co||1.71%|
|The Walt Disney Co||1.5%|
|Bank of America Corp||1.43%|
|Comcast Corp Class A||1.33%|
|Exxon Mobil Corp||1.2%|
IWD’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.58%, 2.25%, 2.24%, 1.78%, and 1.71%.
The Walt Disney Co (1.5%), Bank of America Corp (1.43%), and Comcast Corp Class A (1.33%) have a slightly smaller but still significant weight. Exxon Mobil Corp and Pfizer Inc are also represented in the IWD’s holdings at 1.2% and 1.18%.
The Vanguard Value Index Fund ETF Shares (VTV) has a Mean Return of 1.05 with a Sharpe Ratio of 0.87 and a R-squared of 92.61. Its Beta is 0.98 while VTV’s Treynor Ratio is 11.94. Furthermore, the fund has a Standard Deviation of 13.78 and a Alpha of -1.92.
The iShares Russell 1000 Value ETF (IWD) has a Treynor Ratio of 11.06 with a R-squared of 92.38 and a Beta of 1.02. Its Mean Return is 1.03 while IWD’s Sharpe Ratio is 0.81. Furthermore, the fund has a Alpha of -3.23 and a Standard Deviation of 14.35.
VTV’s Mean Return is 0.02 points higher than that of IWD and its R-squared is 0.23 points higher. With a Standard Deviation of 13.78, VTV is slightly less volatile than IWD. The Alpha and Beta of VTV are 1.31 points higher and 0.04 points lower than IWD’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 IWD, returning 32.18% on an annual basis. The poorest year for IWD in the last ten years was 2018, with a yield of -8.4%. Most years the iShares Russell 1000 Value ETF has given investors modest returns, such as in 2014, 2017, and 2010, when gains were 13.21%, 13.47%, and 15.3% 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 IWD, the end total would have been $30,746. This equates to a $20,746 profit over 11 years and a compound annual growth rate (CAGR) of 11.40%.
VTV’s CAGR is 0.67 percentage points higher than that of IWD and as a result, would have yielded $2,417 more on a $10,000 investment. Thus, VTV outperformed IWD by 0.67% annually.
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