The Vanguard Growth Index Fund ETF Shares (VUG) and the iShares Core S&P Small-Cap ETF (IJR) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and IJR is a iShares Small Blend fund. So, what’s the difference between VUG and IJR? And which fund is better?
The expense ratio of VUG is 0.02 percentage points lower than IJR’s (0.04% vs. 0.06%). VUG also has a higher exposure to the technology sector and a lower standard deviation. Overall, VUG has provided higher returns than IJR over the past ten years.
In this article, we’ll compare VUG vs. IJR. We’ll look at performance and holdings, as well as at their fund composition and risk metrics. Moreover, I’ll also discuss VUG’s and IJR’s annual returns, industry exposure, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Growth Index Fund ETF Shares||iShares Core S&P Small-Cap ETF|
|Category||Large Growth||Small Blend|
The Vanguard Growth Index Fund ETF Shares (VUG) is a Large Growth fund that is issued by Vanguard. It currently has 165.53B total assets under management and has yielded an average annual return of 17.58% over the past 10 years. The fund has a dividend yield of 0.57% with an expense ratio of 0.04%.
The iShares Core S&P Small-Cap ETF (IJR) is a Small Blend fund that is issued by iShares. It currently has 68.64B total assets under management and has yielded an average annual return of 13.97% over the past 10 years. The fund has a dividend yield of 0.96% with an expense ratio of 0.06%.
VUG’s dividend yield is 0.39% lower than that of IJR (0.57% vs. 0.96%). Also, VUG yielded on average 3.61% more per year over the past decade (17.58% vs. 13.97%). The expense ratio of VUG is 0.02 percentage points lower than IJR’s (0.04% vs. 0.06%).
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The Vanguard Growth Index Fund ETF Shares (VUG) has the most exposure to the Technology sector at 39.05%. This is followed by Consumer Cyclical and Communication Services at 17.78% and 16.49% respectively. Energy (0.32%), Basic Materials (1.52%), and Consumer Defensive (2.41%) only make up 4.25% of the fund’s total assets.
VUG’s mid-section with moderate exposure is comprised of Real Estate, Industrials, Financial Services, Healthcare, and Communication Services stocks at 2.46%, 5.13%, 6.75%, 8.09%, and 16.49%.
The iShares Core S&P Small-Cap ETF (IJR) has the most exposure to the Industrials sector at 17.31%. This is followed by Financial Services and Technology at 15.91% and 14.32% respectively. Communication Services (2.59%), Energy (4.0%), and Consumer Defensive (4.01%) only make up 10.60% of the fund’s total assets.
IJR’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Consumer Cyclical, and Technology stocks at 5.34%, 9.55%, 11.55%, 13.61%, and 14.32%.
VUG is 24.73% more exposed to the Technology sector than IJR (39.05% vs 14.32%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 4.17% higher and 13.90% higher respectively (17.78% vs. 13.61% and 16.49% vs. 2.59%). In total, Energy, Basic Materials, and Consumer Defensive also make up 9.10% less of the fund’s holdings compared to IJR (4.25% vs. 13.35%).
|Facebook Inc Class A||3.89%|
|Alphabet Inc Class A||3.43%|
|Alphabet Inc Class C||3.22%|
|Visa Inc Class A||1.78%|
|PayPal Holdings Inc||1.6%|
VUG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.13%, 9.52%, 6.88%, 3.89%, and 3.43%.
Alphabet Inc Class C (3.22%), Tesla Inc (2.44%), and NVIDIA Corp (2.21%) have a slightly smaller but still significant weight. Visa Inc Class A and PayPal Holdings Inc are also represented in the VUG’s holdings at 1.78% and 1.6%.
|BlackRock Cash Funds Treasury SL Agency||1.08%|
|GameStop Corp Class A||0.86%|
|Power Integrations Inc||0.57%|
|Chart Industries Inc||0.53%|
IJR’s Top Holdings are BlackRock Cash Funds Treasury SL Agency, GameStop Corp Class A, Omnicell Inc, Stamps.com Inc, and Saia Inc at 1.08%, 0.86%, 0.61%, 0.58%, and 0.57%.
Power Integrations Inc (0.57%), Exponent Inc (0.54%), and NeoGenomics Inc (0.53%) have a slightly smaller but still significant weight. Chart Industries Inc and Macy’s Inc are also represented in the IJR’s holdings at 0.53% and 0.51%.
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The Vanguard Growth Index Fund ETF Shares (VUG) has a Standard Deviation of 14.76 with a Alpha of 1.81 and a Mean Return of 1.44. Its Sharpe Ratio is 1.13 while VUG’s R-squared is 92.48. Furthermore, the fund has a Beta of 1.04 and a Treynor Ratio of 16.13.
The iShares Core S&P Small-Cap ETF (IJR) has a Sharpe Ratio of 0.74 with a R-squared of 76.03 and a Beta of 1.2. Its Alpha is -3.7 while IJR’s Standard Deviation is 18.68. Furthermore, the fund has a Mean Return of 1.21 and a Treynor Ratio of 10.77.
VUG’s Mean Return is 0.23 points higher than that of IJR and its R-squared is 16.45 points higher. With a Standard Deviation of 14.76, VUG is slightly less volatile than IJR. The Alpha and Beta of VUG are 5.51 points higher and 0.16 points lower than IJR’s Alpha and Beta.
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VUG had its best year in 2020 with an annual return of 40.16%. VUG’s worst year over the past decade yielded -3.32% and occurred in 2018. In most years the Vanguard Growth Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 13.62%, 17.03%, and 17.11% respectively.
The year 2013 was the strongest year for IJR, returning 41.36% on an annual basis. The poorest year for IJR in the last ten years was 2018, with a yield of -8.43%. Most years the iShares Core S&P Small-Cap ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 11.24%, 13.2%, and 16.28% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VUG would have resulted in a final balance of $54,735. This is a profit of $44,735 over 11 years and amounts to a compound annual growth rate (CAGR) of 17.58%.
With a $10,000 investment in IJR, the end total would have been $38,800. This equates to a $28,800 profit over 11 years and a compound annual growth rate (CAGR) of 13.97%.
VUG’s CAGR is 3.61 percentage points higher than that of IJR and as a result, would have yielded $15,935 more on a $10,000 investment. Thus, VUG outperformed IJR by 3.61% annually.
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