Skip to content

VYM vs. IWN: What’s The Difference?

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. VYM is a Vanguard Large Value fund and IWN is a iShares Small Value fund. So, what’s the difference between VYM and IWN? And which fund is better?

The expense ratio of VYM is 0.18 percentage points lower than IWN’s (0.06% vs. 0.24%). VYM also has a lower exposure to the financial services sector and a lower standard deviation. Overall, VYM has provided higher returns than IWN over the past ten years.

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

Introduction To Mutual Funds
Introduction To Mutual Funds
TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

VYMIWN
NameVanguard High Dividend Yield Index Fund ETF SharesiShares Russell 2000 Value ETF
CategoryLarge ValueSmall Value
IssuerVanguardiShares
AUM48.5B15.48B
Avg. Return12.20%10.96%
Div. Yield2.79%1.26%
Expense Ratio0.06%0.24%

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) is a Large Value fund that is issued by Vanguard. It currently has 48.5B total assets under management and has yielded an average annual return of 12.20% over the past 10 years. The fund has a dividend yield of 2.79% with an expense ratio of 0.06%.

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%.

VYM’s dividend yield is 1.53% higher than that of IWN (2.79% vs. 1.26%). Also, VYM yielded on average 1.24% more per year over the past decade (12.20% vs. 10.96%). The expense ratio of VYM is 0.18 percentage points lower than IWN’s (0.06% vs. 0.24%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

VYM vs. IWN - Industry Exposure

VYMIWN
Technology9.77%6.02%
Industrials10.14%14.58%
Energy7.12%5.84%
Communication Services5.91%4.17%
Utilities7.27%4.69%
Healthcare13.61%10.94%
Consumer Defensive14.13%3.77%
Real Estate0.02%14.36%
Financial Services22.05%22.97%
Consumer Cyclical5.57%8.39%
Basic Materials4.41%4.29%

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has the most exposure to the Financial Services sector at 22.05%. This is followed by Consumer Defensive and Healthcare at 14.13% and 13.61% respectively. Basic Materials (4.41%), Consumer Cyclical (5.57%), and Communication Services (5.91%) only make up 15.89% of the fund’s total assets.

VYM’s mid-section with moderate exposure is comprised of Energy, Utilities, Technology, Industrials, and Healthcare stocks at 7.12%, 7.27%, 9.77%, 10.14%, and 13.61%.

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%.

VYM is 0.92% less exposed to the Financial Services sector than IWN (22.05% vs 22.97%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 10.36% higher and 2.67% higher respectively (14.13% vs. 3.77% and 13.61% vs. 10.94%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 0.96% less of the fund’s holdings compared to IWN (15.89% vs. 16.85%).

Holdings

VYM - Holdings

VYM HoldingsWeight
JPMorgan Chase & Co3.53%
Johnson & Johnson3.28%
The Home Depot Inc2.59%
Procter & Gamble Co2.48%
Bank of America Corp2.35%
Exxon Mobil Corp2.02%
Comcast Corp Class A1.96%
Verizon Communications Inc1.75%
Intel Corp1.71%
Cisco Systems Inc1.69%

VYM’s Top Holdings are JPMorgan Chase & Co, Johnson & Johnson, The Home Depot Inc, Procter & Gamble Co, and Bank of America Corp at 3.53%, 3.28%, 2.59%, 2.48%, and 2.35%.

Exxon Mobil Corp (2.02%), Comcast Corp Class A (1.96%), and Verizon Communications Inc (1.75%) have a slightly smaller but still significant weight. Intel Corp and Cisco Systems Inc are also represented in the VYM’s holdings at 1.71% and 1.69%.

IWN - Holdings

IWN HoldingsWeight
AMC Entertainment Holdings Inc Class A1.06%
Tenet Healthcare Corp0.47%
Stag Industrial Inc0.47%
Ovintiv Inc0.45%
EMCOR Group Inc0.42%
Valley National Bancorp0.37%
Chesapeake Energy Corp Ordinary Shares – New0.37%
Agree Realty Corp0.36%
Macy’s Inc0.35%
Essent Group Ltd0.35%

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%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

VYMIWN
Mean Return1.041.01
R-squared88.8872.64
Std. Deviation12.6919.28
Alpha-0.7-6.32
Beta0.881.21
Sharpe Ratio0.930.59
Treynor Ratio13.248.3

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Beta of 0.88 with a Mean Return of 1.04 and a Alpha of -0.7. Its Sharpe Ratio is 0.93 while VYM’s Treynor Ratio is 13.24. Furthermore, the fund has a R-squared of 88.88 and a Standard Deviation of 12.69.

The iShares Russell 2000 Value ETF (IWN) has a Sharpe Ratio of 0.59 with a Mean Return of 1.01 and a R-squared of 72.64. Its Standard Deviation is 19.28 while IWN’s Alpha is -6.32. Furthermore, the fund has a Treynor Ratio of 8.3 and a Beta of 1.21.

VYM’s Mean Return is 0.03 points higher than that of IWN and its R-squared is 16.24 points higher. With a Standard Deviation of 12.69, VYM is slightly less volatile than IWN. The Alpha and Beta of VYM are 5.62 points higher and 0.33 points lower than IWN’s Alpha and Beta.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

VYM vs. IWN - Annual Returns

YearVYMIWN
20201.14%4.5%
201924.2%22.17%
2018-5.87%-12.94%
201716.42%7.73%
201616.87%31.64%
20150.33%-7.53%
201413.47%4.13%
201330.26%34.3%
201212.68%17.92%
201110.5%-5.64%
201014.17%24.29%

VYM had its best year in 2013 with an annual return of 30.26%. VYM’s worst year over the past decade yielded -5.87% and occurred in 2018. In most years the Vanguard High Dividend Yield Index Fund ETF Shares provided moderate returns such as in 2012, 2014, and 2010 where annual returns amounted to 12.68%, 13.47%, and 14.17% 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

VYM vs. IWN - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VYM$10,000$33,91412.20%
IWN$10,000$28,18910.96%

A $10,000 investment in VYM would have resulted in a final balance of $33,914. This is a profit of $23,914 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.20%.

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%.

VYM’s CAGR is 1.24 percentage points higher than that of IWN and as a result, would have yielded $5,725 more on a $10,000 investment. Thus, VYM outperformed IWN by 1.24% 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.

Leave a Reply

Your email address will not be published.