The Vanguard Growth Index Fund ETF Shares (VUG) and the iShares Russell Mid-Cap ETF (IWR) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and IWR is a iShares Mid-Cap Blend fund. So, what’s the difference between VUG and IWR? And which fund is better?
The expense ratio of VUG is 0.15 percentage points lower than IWR’s (0.04% vs. 0.19%). VUG also has a higher exposure to the technology sector and a lower standard deviation. Overall, VUG has provided higher returns than IWR over the past ten years.
In this article, we’ll compare VUG vs. IWR. We’ll look at holdings and performance, as well as at their portfolio growth and industry exposure. Moreover, I’ll also discuss VUG’s and IWR’s risk metrics, annual returns, and fund composition and examine how these affect their overall returns.
|Name||Vanguard Growth Index Fund ETF Shares||iShares Russell Mid-Cap ETF|
|Category||Large Growth||Mid-Cap 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 Russell Mid-Cap ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% with an expense ratio of 0.19%.
VUG’s dividend yield is 0.42% lower than that of IWR (0.57% vs. 0.99%). Also, VUG yielded on average 3.43% more per year over the past decade (17.58% vs. 14.15%). The expense ratio of VUG is 0.15 percentage points lower than IWR’s (0.04% vs. 0.19%).
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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 Russell Mid-Cap ETF (IWR) has the most exposure to the Technology sector at 19.67%. This is followed by Industrials and Consumer Cyclical at 14.54% and 13.59% respectively. Consumer Defensive (3.82%), Basic Materials (4.1%), and Utilities (4.46%) only make up 12.38% of the fund’s total assets.
IWR’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Healthcare, and Consumer Cyclical stocks at 4.64%, 8.31%, 11.64%, 11.76%, and 13.59%.
VUG is 19.38% more exposed to the Technology sector than IWR (39.05% vs 19.67%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 4.19% higher and 11.85% higher respectively (17.78% vs. 13.59% and 16.49% vs. 4.64%). In total, Energy, Basic Materials, and Consumer Defensive also make up 7.15% less of the fund’s holdings compared to IWR (4.25% vs. 11.40%).
|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%.
|IDEXX Laboratories Inc||0.51%|
|Chipotle Mexican Grill Inc||0.47%|
|Roku Inc Class A||0.44%|
|Marvell Technology Inc||0.44%|
|Trane Technologies PLC||0.43%|
|Carrier Global Corp Ordinary Shares||0.43%|
IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.
Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.
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The Vanguard Growth Index Fund ETF Shares (VUG) has a R-squared of 92.48 with a Treynor Ratio of 16.13 and a Standard Deviation of 14.76. Its Mean Return is 1.44 while VUG’s Sharpe Ratio is 1.13. Furthermore, the fund has a Beta of 1.04 and a Alpha of 1.81.
The iShares Russell Mid-Cap ETF (IWR) has a Beta of 1.11 with a Sharpe Ratio of 0.86 and a Alpha of -2.8. Its Treynor Ratio is 11.72 while IWR’s Standard Deviation is 15.66. Furthermore, the fund has a R-squared of 91.52 and a Mean Return of 1.17.
VUG’s Mean Return is 0.27 points higher than that of IWR and its R-squared is 0.96 points higher. With a Standard Deviation of 14.76, VUG is slightly less volatile than IWR. The Alpha and Beta of VUG are 4.61 points higher and 0.07 points lower than IWR’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 IWR, returning 34.5% on an annual basis. The poorest year for IWR in the last ten years was 2018, with a yield of -9.13%. Most years the iShares Russell Mid-Cap ETF has given investors modest returns, such as in 2016, 2020, and 2012, when gains were 13.58%, 16.91%, and 17.13% 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 IWR, the end total would have been $39,751. This equates to a $29,751 profit over 11 years and a compound annual growth rate (CAGR) of 14.15%.
VUG’s CAGR is 3.43 percentage points higher than that of IWR and as a result, would have yielded $14,984 more on a $10,000 investment. Thus, VUG outperformed IWR by 3.43% annually.
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