VUG vs. IWP: What’s The Difference?

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

The expense ratio of VUG is 0.20 percentage points lower than IWP’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 IWP over the past ten years.

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

Summary

VUG IWP
Name Vanguard Growth Index Fund ETF Shares iShares Russell Mid-Cap Growth ETF
Category Large Growth Mid-Cap Growth
Issuer Vanguard iShares
AUM 165.53B 15.7B
Avg. Return 17.58% 16.75%
Div. Yield 0.57% 0.26%
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 Mid-Cap Growth ETF (IWP) is a Mid-Cap Growth fund that is issued by iShares. It currently has 15.7B total assets under management and has yielded an average annual return of 16.75% over the past 10 years. The fund has a dividend yield of 0.26% with an expense ratio of 0.24%.

VUG’s dividend yield is 0.31% higher than that of IWP (0.57% vs. 0.26%). Also, VUG yielded on average 0.83% more per year over the past decade (17.58% vs. 16.75%). The expense ratio of VUG is 0.20 percentage points lower than IWP’s (0.04% vs. 0.24%).

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Fund Composition

Industry Exposure

VUG vs. IWP - Industry Exposure

VUG IWP
Technology 39.05% 33.88%
Industrials 5.13% 14.09%
Energy 0.32% 1.51%
Communication Services 16.49% 6.32%
Utilities 0.0% 0.16%
Healthcare 8.09% 16.79%
Consumer Defensive 2.41% 2.32%
Real Estate 2.46% 2.46%
Financial Services 6.75% 4.52%
Consumer Cyclical 17.78% 16.09%
Basic Materials 1.52% 1.86%

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 Mid-Cap Growth ETF (IWP) has the most exposure to the Technology sector at 33.88%. This is followed by Healthcare and Consumer Cyclical at 16.79% and 16.09% respectively. Energy (1.51%), Basic Materials (1.86%), and Consumer Defensive (2.32%) only make up 5.69% of the fund’s total assets.

IWP’s mid-section with moderate exposure is comprised of Real Estate, Financial Services, Communication Services, Industrials, and Consumer Cyclical stocks at 2.46%, 4.52%, 6.32%, 14.09%, and 16.09%.

VUG is 5.17% more exposed to the Technology sector than IWP (39.05% vs 33.88%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 1.69% higher and 10.17% higher respectively (17.78% vs. 16.09% and 16.49% vs. 6.32%). In total, Energy, Basic Materials, and Consumer Defensive also make up 1.44% less of the fund’s holdings compared to IWP (4.25% vs. 5.69%).

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%.

IWP - Holdings

IWP Holdings Weight
IDEXX Laboratories Inc 1.3%
DocuSign Inc 1.3%
Roku Inc Class A 1.29%
Match Group Inc 1.06%
Chipotle Mexican Grill Inc 1.06%
Pinterest Inc 1.05%
Veeva Systems Inc Class A 1.04%
Palantir Technologies Inc Ordinary Shares – Class A 1.04%
Lululemon Athletica Inc 1.01%
DexCom Inc 1.0%

IWP’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Roku Inc Class A, Match Group Inc, and Chipotle Mexican Grill Inc at 1.3%, 1.3%, 1.29%, 1.06%, and 1.06%.

Pinterest Inc (1.05%), Veeva Systems Inc Class A (1.04%), and Palantir Technologies Inc Ordinary Shares – Class A (1.04%) have a slightly smaller but still significant weight. Lululemon Athletica Inc and DexCom Inc are also represented in the IWP’s holdings at 1.01% and 1.0%.

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Risk Analysis

VUG IWP
Mean Return 1.44 1.27
R-squared 92.48 87.01
Std. Deviation 14.76 16.05
Alpha 1.81 -1.03
Beta 1.04 1.1
Sharpe Ratio 1.13 0.91
Treynor Ratio 16.13 12.98

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

The iShares Russell Mid-Cap Growth ETF (IWP) has a R-squared of 87.01 with a Treynor Ratio of 12.98 and a Standard Deviation of 16.05. Its Mean Return is 1.27 while IWP’s Beta is 1.1. Furthermore, the fund has a Sharpe Ratio of 0.91 and a Alpha of -1.03.

VUG’s Mean Return is 0.17 points higher than that of IWP and its R-squared is 5.47 points higher. With a Standard Deviation of 14.76, VUG is slightly less volatile than IWP. The Alpha and Beta of VUG are 2.84 points higher and 0.06 points lower than IWP’s Alpha and Beta.

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Performance

Annual Returns

VUG vs. IWP - Annual Returns

Year VUG IWP
2020 40.16% 35.29%
2019 37.26% 35.14%
2018 -3.32% -4.95%
2017 27.8% 24.98%
2016 6.13% 7.15%
2015 3.32% -0.39%
2014 13.62% 11.68%
2013 32.38% 35.44%
2012 17.03% 15.62%
2011 1.87% -1.82%
2010 17.11% 26.1%

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 IWP, returning 35.44% on an annual basis. The poorest year for IWP in the last ten years was 2018, with a yield of -4.95%. Most years the iShares Russell Mid-Cap Growth ETF has given investors modest returns, such as in 2014, 2012, and 2017, when gains were 11.68%, 15.62%, and 24.98% respectively.

Portfolio Growth

VUG vs. IWP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VUG $10,000 $54,735 17.58%
IWP $10,000 $50,191 16.75%

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 IWP, the end total would have been $50,191. This equates to a $40,191 profit over 11 years and a compound annual growth rate (CAGR) of 16.75%.

VUG’s CAGR is 0.83 percentage points higher than that of IWP and as a result, would have yielded $4,544 more on a $10,000 investment. Thus, VUG outperformed IWP by 0.83% annually.


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