VUG vs. IWS: What’s The Difference?

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

The expense ratio of VUG is 0.19 percentage points lower than IWS’s (0.04% vs. 0.23%). VUG also has a higher exposure to the technology sector and a lower standard deviation. Overall, VUG has provided higher returns than IWS over the past ten years.

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

Summary

VUG IWS
Name Vanguard Growth Index Fund ETF Shares iShares Russell Mid-Cap Value ETF
Category Large Growth Mid-Cap Value
Issuer Vanguard iShares
AUM 165.53B 14.24B
Avg. Return 17.58% 12.35%
Div. Yield 0.57% 1.34%
Expense Ratio 0.04% 0.23%

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 Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

VUG’s dividend yield is 0.77% lower than that of IWS (0.57% vs. 1.34%). Also, VUG yielded on average 5.23% more per year over the past decade (17.58% vs. 12.35%). The expense ratio of VUG is 0.19 percentage points lower than IWS’s (0.04% vs. 0.23%).

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Fund Composition

Industry Exposure

VUG vs. IWS - Industry Exposure

VUG IWS
Technology 39.05% 11.39%
Industrials 5.13% 14.6%
Energy 0.32% 4.71%
Communication Services 16.49% 4.08%
Utilities 0.0% 6.97%
Healthcare 8.09% 8.56%
Consumer Defensive 2.41% 4.76%
Real Estate 2.46% 11.71%
Financial Services 6.75% 15.75%
Consumer Cyclical 17.78% 12.07%
Basic Materials 1.52% 5.4%

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 Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.

IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.

VUG is 27.66% more exposed to the Technology sector than IWS (39.05% vs 11.39%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 5.71% higher and 12.41% higher respectively (17.78% vs. 12.07% and 16.49% vs. 4.08%). In total, Energy, Basic Materials, and Consumer Defensive also make up 10.62% less of the fund’s holdings compared to IWS (4.25% vs. 14.87%).

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%.

IWS - Holdings

IWS Holdings Weight
Twitter Inc 0.69%
Marvell Technology Inc 0.69%
IHS Markit Ltd 0.62%
Prudential Financial Inc 0.56%
Otis Worldwide Corp Ordinary Shares 0.54%
International Flavors & Fragrances Inc 0.53%
Xcel Energy Inc 0.52%
Motorola Solutions Inc 0.52%
Aptiv PLC 0.52%
Aflac Inc 0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

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Risk Analysis

VUG IWS
Mean Return 1.44 1.06
R-squared 92.48 87.04
Std. Deviation 14.76 16.03
Alpha 1.81 -4.11
Beta 1.04 1.1
Sharpe Ratio 1.13 0.75
Treynor Ratio 16.13 10.3

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

The iShares Russell Mid-Cap Value ETF (IWS) has a Standard Deviation of 16.03 with a Treynor Ratio of 10.3 and a Alpha of -4.11. Its Mean Return is 1.06 while IWS’s R-squared is 87.04. Furthermore, the fund has a Beta of 1.1 and a Sharpe Ratio of 0.75.

VUG’s Mean Return is 0.38 points higher than that of IWS and its R-squared is 5.44 points higher. With a Standard Deviation of 14.76, VUG is slightly less volatile than IWS. The Alpha and Beta of VUG are 5.92 points higher and 0.06 points lower than IWS’s Alpha and Beta.

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Performance

Annual Returns

VUG vs. IWS - Annual Returns

Year VUG IWS
2020 40.16% 4.76%
2019 37.26% 26.78%
2018 -3.32% -12.36%
2017 27.8% 13.1%
2016 6.13% 19.69%
2015 3.32% -4.93%
2014 13.62% 14.49%
2013 32.38% 33.11%
2012 17.03% 18.27%
2011 1.87% -1.55%
2010 17.11% 24.46%

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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

VUG vs. IWS - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VUG $10,000 $54,735 17.58%
IWS $10,000 $33,083 12.35%

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 IWS, the end total would have been $33,083. This equates to a $23,083 profit over 11 years and a compound annual growth rate (CAGR) of 12.35%.

VUG’s CAGR is 5.23 percentage points higher than that of IWS and as a result, would have yielded $21,652 more on a $10,000 investment. Thus, VUG outperformed IWS by 5.23% annually.


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