VTV vs. IWS: What’s The Difference?

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

The expense ratio of VTV is 0.19 percentage points lower than IWS’s (0.04% vs. 0.23%). VTV also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VTV has provided lower returns than IWS over the past ten years.

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

Summary

VTV IWS
Name Vanguard Value Index Fund ETF Shares iShares Russell Mid-Cap Value ETF
Category Large Value Mid-Cap Value
Issuer Vanguard iShares
AUM 125.77B 14.24B
Avg. Return 12.07% 12.35%
Div. Yield 2.15% 1.34%
Expense Ratio 0.04% 0.23%

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 Mid-Cap Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

VTV’s dividend yield is 0.81% higher than that of IWS (2.15% vs. 1.34%). Also, VTV yielded on average 0.27% less per year over the past decade (12.07% vs. 12.35%). The expense ratio of VTV is 0.19 percentage points lower than IWS’s (0.04% vs. 0.23%).

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Fund Composition

Industry Exposure

VTV vs. IWS - Industry Exposure

VTV IWS
Technology 7.86% 11.39%
Industrials 12.61% 14.6%
Energy 5.59% 4.71%
Communication Services 5.49% 4.08%
Utilities 5.37% 6.97%
Healthcare 19.84% 8.56%
Consumer Defensive 10.72% 4.76%
Real Estate 3.01% 11.71%
Financial Services 22.81% 15.75%
Consumer Cyclical 3.79% 12.07%
Basic Materials 2.91% 5.4%

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 Mid-Cap Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.

IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.

VTV is 7.06% more exposed to the Financial Services sector than IWS (22.81% vs 15.75%). VTV’s exposure to Healthcare and Industrials stocks is 11.28% higher and 1.99% lower respectively (19.84% vs. 8.56% and 12.61% vs. 14.6%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 18.58% less of the fund’s holdings compared to IWS (12.17% vs. 30.75%).

Holdings

VTV - Holdings

VTV Holdings Weight
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%
Intel Corp 1.36%
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%.

IWS - Holdings

IWS Holdings Weight
Twitter Inc 0.69%
Marvell Technology Inc 0.69%
IHS Markit Ltd 0.62%
Prudential Financial Inc 0.56%
Otis Worldwide Corp Ordinary Shares 0.54%
International Flavors & Fragrances Inc 0.53%
Xcel Energy Inc 0.52%
Motorola Solutions Inc 0.52%
Aptiv PLC 0.52%
Aflac Inc 0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

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Risk Analysis

VTV IWS
Mean Return 1.05 1.06
R-squared 92.61 87.04
Std. Deviation 13.78 16.03
Alpha -1.92 -4.11
Beta 0.98 1.1
Sharpe Ratio 0.87 0.75
Treynor Ratio 11.94 10.3

The Vanguard Value Index Fund ETF Shares (VTV) has a Mean Return of 1.05 with a R-squared of 92.61 and a Treynor Ratio of 11.94. Its Sharpe Ratio is 0.87 while VTV’s Beta is 0.98. Furthermore, the fund has a Standard Deviation of 13.78 and a Alpha of -1.92.

The iShares Russell Mid-Cap Value ETF (IWS) has a Treynor Ratio of 10.3 with a Alpha of -4.11 and a Beta of 1.1. Its Sharpe Ratio is 0.75 while IWS’s R-squared is 87.04. Furthermore, the fund has a Standard Deviation of 16.03 and a Mean Return of 1.06.

VTV’s Mean Return is 0.01 points lower than that of IWS and its R-squared is 5.57 points higher. With a Standard Deviation of 13.78, VTV is slightly less volatile than IWS. The Alpha and Beta of VTV are 2.19 points higher and 0.12 points lower than IWS’s Alpha and Beta.

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Performance

Annual Returns

VTV vs. IWS - Annual Returns

Year VTV IWS
2020 2.23% 4.76%
2019 25.85% 26.78%
2018 -5.39% -12.36%
2017 17.12% 13.1%
2016 16.88% 19.69%
2015 -0.89% -4.93%
2014 13.19% 14.49%
2013 33.03% 33.11%
2012 15.19% 18.27%
2011 1.16% -1.55%
2010 14.45% 24.46%

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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

VTV vs. IWS - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VTV $10,000 $33,163 12.07%
IWS $10,000 $33,083 12.35%

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 IWS, the end total would have been $33,083. This equates to a $23,083 profit over 11 years and a compound annual growth rate (CAGR) of 12.35%.

VTV’s CAGR is 0.27 percentage points lower than that of IWS and as a result, would have yielded $80 more on a $10,000 investment. Thus, VTV performed worse than IWS by 0.27% annually.


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