The Vanguard Growth Index Fund ETF Shares (VUG) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and IWN is a iShares Small Value fund. So, what’s the difference between VUG and IWN? And which fund is better?
The expense ratio of VUG is 0.20 percentage points lower than IWN’s (0.04% vs. 0.24%). VUG also has a higher exposure to the technology sector and a lower standard deviation. Overall, VUG has provided higher returns than IWN over the past ten years.
In this article, we’ll compare VUG vs. IWN. We’ll look at annual returns and risk metrics, as well as at their portfolio growth and performance. Moreover, I’ll also discuss VUG’s and IWN’s holdings, fund composition, and industry exposure and examine how these affect their overall returns.
Summary
| VUG | IWN | |
| Name | Vanguard Growth Index Fund ETF Shares | iShares Russell 2000 Value ETF |
| Category | Large Growth | Small Value |
| Issuer | Vanguard | iShares |
| AUM | 165.53B | 15.48B |
| Avg. Return | 17.58% | 10.96% |
| Div. Yield | 0.57% | 1.26% |
| Expense Ratio | 0.04% | 0.24% |
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 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.
VUG’s dividend yield is 0.69% lower than that of IWN (0.57% vs. 1.26%). Also, VUG yielded on average 6.62% more per year over the past decade (17.58% vs. 10.96%). The expense ratio of VUG is 0.20 percentage points lower than IWN’s (0.04% vs. 0.24%).
Fund Composition
Industry Exposure
| VUG | IWN | |
| Technology | 39.05% | 6.02% |
| Industrials | 5.13% | 14.58% |
| Energy | 0.32% | 5.84% |
| Communication Services | 16.49% | 4.17% |
| Utilities | 0.0% | 4.69% |
| Healthcare | 8.09% | 10.94% |
| Consumer Defensive | 2.41% | 3.77% |
| Real Estate | 2.46% | 14.36% |
| Financial Services | 6.75% | 22.97% |
| Consumer Cyclical | 17.78% | 8.39% |
| Basic Materials | 1.52% | 4.29% |
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 2000 Value ETF (IWN) has the most exposure to the Financial Services sector at 22.97%. This is followed by Industrials and Real Estate at 14.58% and 14.36% respectively. Communication Services (4.17%), Basic Materials (4.29%), and Utilities (4.69%) only make up 13.15% of the fund’s total assets.
IWN’s mid-section with moderate exposure is comprised of Energy, Technology, Consumer Cyclical, Healthcare, and Real Estate stocks at 5.84%, 6.02%, 8.39%, 10.94%, and 14.36%.
VUG is 33.03% more exposed to the Technology sector than IWN (39.05% vs 6.02%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 9.39% higher and 12.32% higher respectively (17.78% vs. 8.39% and 16.49% vs. 4.17%). In total, Energy, Basic Materials, and Consumer Defensive also make up 9.65% less of the fund’s holdings compared to IWN (4.25% vs. 13.90%).
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%.
| IWN Holdings | Weight |
| AMC Entertainment Holdings Inc Class A | 1.06% |
| Tenet Healthcare Corp | 0.47% |
| Stag Industrial Inc | 0.47% |
| Ovintiv Inc | 0.45% |
| EMCOR Group Inc | 0.42% |
| Valley National Bancorp | 0.37% |
| Chesapeake Energy Corp Ordinary Shares – New | 0.37% |
| Agree Realty Corp | 0.36% |
| Macy’s Inc | 0.35% |
| Essent Group Ltd | 0.35% |
IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.
Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.
Risk Analysis
| VUG | IWN | |
| Mean Return | 1.44 | 1.01 |
| R-squared | 92.48 | 72.64 |
| Std. Deviation | 14.76 | 19.28 |
| Alpha | 1.81 | -6.32 |
| Beta | 1.04 | 1.21 |
| Sharpe Ratio | 1.13 | 0.59 |
| Treynor Ratio | 16.13 | 8.3 |
The Vanguard Growth Index Fund ETF Shares (VUG) has a Alpha of 1.81 with a Beta of 1.04 and a R-squared of 92.48. Its Treynor Ratio is 16.13 while VUG’s Mean Return is 1.44. Furthermore, the fund has a Standard Deviation of 14.76 and a Sharpe Ratio of 1.13.
The iShares Russell 2000 Value ETF (IWN) has a Beta of 1.21 with a Mean Return of 1.01 and a Standard Deviation of 19.28. Its Alpha is -6.32 while IWN’s Sharpe Ratio is 0.59. Furthermore, the fund has a Treynor Ratio of 8.3 and a R-squared of 72.64.
VUG’s Mean Return is 0.43 points higher than that of IWN and its R-squared is 19.84 points higher. With a Standard Deviation of 14.76, VUG is slightly less volatile than IWN. The Alpha and Beta of VUG are 8.13 points higher and 0.17 points lower than IWN’s Alpha and Beta.
Performance
Annual Returns
| Year | VUG | IWN |
| 2020 | 40.16% | 4.5% |
| 2019 | 37.26% | 22.17% |
| 2018 | -3.32% | -12.94% |
| 2017 | 27.8% | 7.73% |
| 2016 | 6.13% | 31.64% |
| 2015 | 3.32% | -7.53% |
| 2014 | 13.62% | 4.13% |
| 2013 | 32.38% | 34.3% |
| 2012 | 17.03% | 17.92% |
| 2011 | 1.87% | -5.64% |
| 2010 | 17.11% | 24.29% |
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 IWN, returning 34.3% on an annual basis. The poorest year for IWN in the last ten years was 2018, with a yield of -12.94%. Most years the iShares Russell 2000 Value ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 4.5%, 7.73%, and 17.92% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VUG | $10,000 | $54,735 | 17.58% |
| IWN | $10,000 | $28,189 | 10.96% |
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 IWN, the end total would have been $28,189. This equates to a $18,189 profit over 11 years and a compound annual growth rate (CAGR) of 10.96%.
VUG’s CAGR is 6.62 percentage points higher than that of IWN and as a result, would have yielded $26,546 more on a $10,000 investment. Thus, VUG outperformed IWN by 6.62% annually.
Current recommendations:
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
