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VWO vs. IWP: What’s The Difference?

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

The expense ratio of VWO is 0.14 percentage points lower than IWP’s (0.1% vs. 0.24%). VWO also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VWO has provided lower returns than IWP over the past ten years.

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

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Summary

VWOIWP
NameVanguard FTSE Emerging Markets Index Fund ETF SharesiShares Russell Mid-Cap Growth ETF
CategoryDiversified Emerging MktsMid-Cap Growth
IssuerVanguardiShares
AUM117.28B15.7B
Avg. Return5.79%16.75%
Div. Yield1.98%0.26%
Expense Ratio0.1%0.24%

The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) is a Diversified Emerging Mkts fund that is issued by Vanguard. It currently has 117.28B total assets under management and has yielded an average annual return of 5.79% over the past 10 years. The fund has a dividend yield of 1.98% with an expense ratio of 0.1%.

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%.

VWO’s dividend yield is 1.72% higher than that of IWP (1.98% vs. 0.26%). Also, VWO yielded on average 10.96% less per year over the past decade (5.79% vs. 16.75%). The expense ratio of VWO is 0.14 percentage points lower than IWP’s (0.1% vs. 0.24%).

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Fund Composition

Industry Exposure

VWO vs. IWP - Industry Exposure

VWOIWP
Technology17.06%33.88%
Industrials5.95%14.09%
Energy5.48%1.51%
Communication Services11.41%6.32%
Utilities2.55%0.16%
Healthcare5.33%16.79%
Consumer Defensive5.87%2.32%
Real Estate3.13%2.46%
Financial Services18.15%4.52%
Consumer Cyclical16.1%16.09%
Basic Materials8.98%1.86%

The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) has the most exposure to the Financial Services sector at 18.15%. This is followed by Technology and Consumer Cyclical at 17.06% and 16.1% respectively. Real Estate (3.13%), Healthcare (5.33%), and Energy (5.48%) only make up 13.94% of the fund’s total assets.

VWO’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Basic Materials, Communication Services, and Consumer Cyclical stocks at 5.87%, 5.95%, 8.98%, 11.41%, and 16.1%.

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%.

VWO is 13.63% more exposed to the Financial Services sector than IWP (18.15% vs 4.52%). VWO’s exposure to Technology and Consumer Cyclical stocks is 16.82% lower and 0.01% higher respectively (17.06% vs. 33.88% and 16.1% vs. 16.09%). In total, Real Estate, Healthcare, and Energy also make up 6.82% less of the fund’s holdings compared to IWP (13.94% vs. 20.76%).

Holdings

VWO - Holdings

VWO HoldingsWeight
Tencent Holdings Ltd5.29%
Alibaba Group Holding Ltd Ordinary Shares4.73%
Taiwan Semiconductor Manufacturing Co Ltd4.58%
Meituan1.88%
Taiwan Semiconductor Manufacturing Co Ltd ADR1.7%
Reliance Industries Ltd Shs Dematerialised1.06%
Naspers Ltd Class N1.01%
Vale SA0.92%
Infosys Ltd0.91%
China Construction Bank Corp Class H0.84%

VWO’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Taiwan Semiconductor Manufacturing Co Ltd, Meituan, and Taiwan Semiconductor Manufacturing Co Ltd ADR at 5.29%, 4.73%, 4.58%, 1.88%, and 1.7%.

Reliance Industries Ltd Shs Dematerialised (1.06%), Naspers Ltd Class N (1.01%), and Vale SA (0.92%) have a slightly smaller but still significant weight. Infosys Ltd and China Construction Bank Corp Class H are also represented in the VWO’s holdings at 0.91% and 0.84%.

IWP - Holdings

IWP HoldingsWeight
IDEXX Laboratories Inc1.3%
DocuSign Inc1.3%
Roku Inc Class A1.29%
Match Group Inc1.06%
Chipotle Mexican Grill Inc1.06%
Pinterest Inc1.05%
Veeva Systems Inc Class A1.04%
Palantir Technologies Inc Ordinary Shares – Class A1.04%
Lululemon Athletica Inc1.01%
DexCom Inc1.0%

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

VWOIWP
Mean Return0.451.27
R-squared81.6987.01
Std. Deviation17.6416.05
Alpha-1.36-1.03
Beta1.061.1
Sharpe Ratio0.270.91
Treynor Ratio3.1412.98

The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) has a Treynor Ratio of 3.14 with a Sharpe Ratio of 0.27 and a R-squared of 81.69. Its Beta is 1.06 while VWO’s Standard Deviation is 17.64. Furthermore, the fund has a Mean Return of 0.45 and a Alpha of -1.36.

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

VWO’s Mean Return is 0.82 points lower than that of IWP and its R-squared is 5.32 points lower. With a Standard Deviation of 17.64, VWO is slightly more volatile than IWP. The Alpha and Beta of VWO are 0.33 points lower and 0.04 points lower than IWP’s Alpha and Beta.

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Performance

Annual Returns

VWO vs. IWP - Annual Returns

YearVWOIWP
202015.32%35.29%
201920.4%35.14%
2018-14.57%-4.95%
201731.38%24.98%
201611.75%7.15%
2015-15.35%-0.39%
20140.6%11.68%
2013-5.0%35.44%
201218.84%15.62%
2011-18.68%-1.82%
201018.99%26.1%

VWO had its best year in 2017 with an annual return of 31.38%. VWO’s worst year over the past decade yielded -18.68% and occurred in 2011. In most years the Vanguard FTSE Emerging Markets Index Fund ETF Shares provided moderate returns such as in 2014, 2016, and 2020 where annual returns amounted to 0.6%, 11.75%, and 15.32% 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

VWO vs. IWP - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VWO$10,000$16,2005.79%
IWP$10,000$50,19116.75%

A $10,000 investment in VWO would have resulted in a final balance of $16,200. This is a profit of $6,200 over 11 years and amounts to a compound annual growth rate (CAGR) of 5.79%.

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%.

VWO’s CAGR is 10.96 percentage points lower than that of IWP and as a result, would have yielded $33,991 less on a $10,000 investment. Thus, VWO performed worse than IWP by 10.96% annually.


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