The Vanguard Growth Index Fund ETF Shares (VUG) and the iShares S&P 500 Growth ETF (IVW) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and IVW is a iShares Large Growth fund. So, what’s the difference between VUG and IVW? And which fund is better?
The expense ratio of VUG is 0.14 percentage points lower than IVW’s (0.04% vs. 0.18%). VUG also has a higher exposure to the technology sector and a higher standard deviation. Overall, VUG has provided higher returns than IVW over the past ten years.
In this article, we’ll compare VUG vs. IVW. We’ll look at industry exposure and fund composition, as well as at their risk metrics and portfolio growth. Moreover, I’ll also discuss VUG’s and IVW’s holdings, performance, and annual returns and examine how these affect their overall returns.
Summary
| VUG | IVW | |
| Name | Vanguard Growth Index Fund ETF Shares | iShares S&P 500 Growth ETF |
| Category | Large Growth | Large Growth |
| Issuer | Vanguard | iShares |
| AUM | 165.53B | 35.72B |
| Avg. Return | 17.58% | 16.74% |
| Div. Yield | 0.57% | 0.61% |
| Expense Ratio | 0.04% | 0.18% |
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 S&P 500 Growth ETF (IVW) is a Large Growth fund that is issued by iShares. It currently has 35.72B total assets under management and has yielded an average annual return of 16.74% over the past 10 years. The fund has a dividend yield of 0.61% with an expense ratio of 0.18%.
VUG’s dividend yield is 0.04% lower than that of IVW (0.57% vs. 0.61%). Also, VUG yielded on average 0.84% more per year over the past decade (17.58% vs. 16.74%). The expense ratio of VUG is 0.14 percentage points lower than IVW’s (0.04% vs. 0.18%).
Fund Composition
Industry Exposure
| VUG | IVW | |
| Technology | 39.05% | 37.8% |
| Industrials | 5.13% | 5.72% |
| Energy | 0.32% | 0.06% |
| Communication Services | 16.49% | 15.44% |
| Utilities | 0.0% | 0.47% |
| Healthcare | 8.09% | 11.88% |
| Consumer Defensive | 2.41% | 3.84% |
| Real Estate | 2.46% | 1.11% |
| Financial Services | 6.75% | 6.78% |
| Consumer Cyclical | 17.78% | 15.25% |
| Basic Materials | 1.52% | 1.65% |
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 S&P 500 Growth ETF (IVW) has the most exposure to the Technology sector at 37.8%. This is followed by Communication Services and Consumer Cyclical at 15.44% and 15.25% respectively. Utilities (0.47%), Real Estate (1.11%), and Basic Materials (1.65%) only make up 3.23% of the fund’s total assets.
IVW’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 3.84%, 5.72%, 6.78%, 11.88%, and 15.25%.
VUG is 1.25% more exposed to the Technology sector than IVW (39.05% vs 37.8%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 2.53% higher and 1.05% higher respectively (17.78% vs. 15.25% and 16.49% vs. 15.44%). In total, Energy, Basic Materials, and Consumer Defensive also make up 1.30% less of the fund’s holdings compared to IVW (4.25% vs. 5.55%).
Holdings
| VUG Holdings | Weight |
| Apple Inc | 10.13% |
| Microsoft Corp | 9.52% |
| Amazon.com Inc | 6.88% |
| Facebook Inc Class A | 3.89% |
| Alphabet Inc Class A | 3.43% |
| Alphabet Inc Class C | 3.22% |
| Tesla Inc | 2.44% |
| NVIDIA Corp | 2.21% |
| 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%.
| IVW Holdings | Weight |
| Apple Inc | 11.46% |
| Microsoft Corp | 10.75% |
| Amazon.com Inc | 7.14% |
| Facebook Inc Class A | 4.28% |
| Alphabet Inc Class A | 4.06% |
| Alphabet Inc Class C | 3.86% |
| Tesla Inc | 2.65% |
| NVIDIA Corp | 2.43% |
| PayPal Holdings Inc | 1.62% |
| Adobe Inc | 1.49% |
IVW’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 11.46%, 10.75%, 7.14%, 4.28%, and 4.06%.
Alphabet Inc Class C (3.86%), Tesla Inc (2.65%), and NVIDIA Corp (2.43%) have a slightly smaller but still significant weight. PayPal Holdings Inc and Adobe Inc are also represented in the IVW’s holdings at 1.62% and 1.49%.
Risk Analysis
| VUG | IVW | |
| Mean Return | 1.44 | 1.44 |
| R-squared | 92.48 | 93.82 |
| Std. Deviation | 14.76 | 13.77 |
| Alpha | 1.81 | 2.19 |
| Beta | 1.04 | 0.98 |
| Sharpe Ratio | 1.13 | 1.21 |
| Treynor Ratio | 16.13 | 17.24 |
The Vanguard Growth Index Fund ETF Shares (VUG) has a Alpha of 1.81 with a Sharpe Ratio of 1.13 and a Standard Deviation of 14.76. Its Treynor Ratio is 16.13 while VUG’s Mean Return is 1.44. Furthermore, the fund has a R-squared of 92.48 and a Beta of 1.04.
The iShares S&P 500 Growth ETF (IVW) has a Mean Return of 1.44 with a Treynor Ratio of 17.24 and a Sharpe Ratio of 1.21. Its Beta is 0.98 while IVW’s Standard Deviation is 13.77. Furthermore, the fund has a R-squared of 93.82 and a Alpha of 2.19.
VUG’s Mean Return is 0.00 points lower than that of IVW and its R-squared is 1.34 points lower. With a Standard Deviation of 14.76, VUG is slightly more volatile than IVW. The Alpha and Beta of VUG are 0.38 points lower and 0.06 points higher than IVW’s Alpha and Beta.
Performance
Annual Returns
| Year | VUG | IVW |
| 2020 | 40.16% | 33.21% |
| 2019 | 37.26% | 30.91% |
| 2018 | -3.32% | -0.17% |
| 2017 | 27.8% | 27.2% |
| 2016 | 6.13% | 6.74% |
| 2015 | 3.32% | 5.33% |
| 2014 | 13.62% | 14.67% |
| 2013 | 32.38% | 32.48% |
| 2012 | 17.03% | 14.39% |
| 2011 | 1.87% | 4.49% |
| 2010 | 17.11% | 14.84% |
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 2020 was the strongest year for IVW, returning 33.21% on an annual basis. The poorest year for IVW in the last ten years was 2018, with a yield of -0.17%. Most years the iShares S&P 500 Growth ETF has given investors modest returns, such as in 2012, 2014, and 2010, when gains were 14.39%, 14.67%, and 14.84% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VUG | $10,000 | $54,735 | 17.58% |
| IVW | $10,000 | $51,915 | 16.74% |
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 IVW, the end total would have been $51,915. This equates to a $41,915 profit over 11 years and a compound annual growth rate (CAGR) of 16.74%.
VUG’s CAGR is 0.84 percentage points higher than that of IVW and as a result, would have yielded $2,820 more on a $10,000 investment. Thus, VUG outperformed IVW by 0.84% annually.
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