VUG vs. IWD: What’s The Difference?

The Vanguard Growth Index Fund ETF Shares (VUG) and the iShares Russell 1000 Value ETF (IWD) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and IWD is a iShares Large Value fund. So, what’s the difference between VUG and IWD? And which fund is better?

The expense ratio of VUG is 0.15 percentage points lower than IWD’s (0.04% vs. 0.19%). VUG also has a higher exposure to the technology sector and a higher standard deviation. Overall, VUG has provided higher returns than IWD over the past ten years.

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

Summary

VUG IWD
Name Vanguard Growth Index Fund ETF Shares iShares Russell 1000 Value ETF
Category Large Growth Large Value
Issuer Vanguard iShares
AUM 165.53B 54.1B
Avg. Return 17.58% 11.40%
Div. Yield 0.57% 1.57%
Expense Ratio 0.04% 0.19%

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 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%.

VUG’s dividend yield is 1.00% lower than that of IWD (0.57% vs. 1.57%). Also, VUG yielded on average 6.18% more per year over the past decade (17.58% vs. 11.40%). The expense ratio of VUG is 0.15 percentage points lower than IWD’s (0.04% vs. 0.19%).

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Fund Composition

Industry Exposure

VUG vs. IWD - Industry Exposure

VUG IWD
Technology 39.05% 10.28%
Industrials 5.13% 11.77%
Energy 0.32% 4.76%
Communication Services 16.49% 8.67%
Utilities 0.0% 4.88%
Healthcare 8.09% 17.78%
Consumer Defensive 2.41% 7.76%
Real Estate 2.46% 4.94%
Financial Services 6.75% 20.43%
Consumer Cyclical 17.78% 5.62%
Basic Materials 1.52% 3.1%

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 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%.

VUG is 28.77% more exposed to the Technology sector than IWD (39.05% vs 10.28%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 12.16% higher and 7.82% higher respectively (17.78% vs. 5.62% and 16.49% vs. 8.67%). In total, Energy, Basic Materials, and Consumer Defensive also make up 11.37% less of the fund’s holdings compared to IWD (4.25% vs. 15.62%).

Holdings

VUG - 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%.

IWD - Holdings

IWD Holdings Weight
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%
Pfizer Inc 1.18%

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%.

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Risk Analysis

VUG IWD
Mean Return 1.44 1.03
R-squared 92.48 92.38
Std. Deviation 14.76 14.35
Alpha 1.81 -3.23
Beta 1.04 1.02
Sharpe Ratio 1.13 0.81
Treynor Ratio 16.13 11.06

The Vanguard Growth Index Fund ETF Shares (VUG) has a Beta of 1.04 with a Sharpe Ratio of 1.13 and a Standard Deviation of 14.76. Its Mean Return is 1.44 while VUG’s Alpha is 1.81. Furthermore, the fund has a R-squared of 92.48 and a Treynor Ratio of 16.13.

The iShares Russell 1000 Value ETF (IWD) has a Treynor Ratio of 11.06 with a Mean Return of 1.03 and a Sharpe Ratio of 0.81. Its R-squared is 92.38 while IWD’s Alpha is -3.23. Furthermore, the fund has a Beta of 1.02 and a Standard Deviation of 14.35.

VUG’s Mean Return is 0.41 points higher than that of IWD and its R-squared is 0.10 points higher. With a Standard Deviation of 14.76, VUG is slightly more volatile than IWD. The Alpha and Beta of VUG are 5.04 points higher and 0.02 points higher than IWD’s Alpha and Beta.

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Performance

Annual Returns

VUG vs. IWD - Annual Returns

Year VUG IWD
2020 40.16% 2.67%
2019 37.26% 26.34%
2018 -3.32% -8.4%
2017 27.8% 13.47%
2016 6.13% 17.09%
2015 3.32% -3.95%
2014 13.62% 13.21%
2013 32.38% 32.18%
2012 17.03% 17.28%
2011 1.87% 0.21%
2010 17.11% 15.3%

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 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.

Portfolio Growth

VUG vs. IWD - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VUG $10,000 $54,735 17.58%
IWD $10,000 $30,746 11.40%

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 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%.

VUG’s CAGR is 6.18 percentage points higher than that of IWD and as a result, would have yielded $23,989 more on a $10,000 investment. Thus, VUG outperformed IWD by 6.18% annually.


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