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.

Summary

VYM IWN
Name Vanguard High Dividend Yield Index Fund ETF Shares iShares Russell 2000 Value ETF
Category Large Value Small Value
Issuer Vanguard iShares
AUM 48.5B 15.48B
Avg. Return 12.20% 10.96%
Div. Yield 2.79% 1.26%
Expense Ratio 0.06% 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%).

Fund Composition

Industry Exposure

VYM vs. IWN - Industry Exposure

VYM IWN
Technology 9.77% 6.02%
Industrials 10.14% 14.58%
Energy 7.12% 5.84%
Communication Services 5.91% 4.17%
Utilities 7.27% 4.69%
Healthcare 13.61% 10.94%
Consumer Defensive 14.13% 3.77%
Real Estate 0.02% 14.36%
Financial Services 22.05% 22.97%
Consumer Cyclical 5.57% 8.39%
Basic Materials 4.41% 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 Holdings Weight
JPMorgan Chase & Co 3.53%
Johnson & Johnson 3.28%
The Home Depot Inc 2.59%
Procter & Gamble Co 2.48%
Bank of America Corp 2.35%
Exxon Mobil Corp 2.02%
Comcast Corp Class A 1.96%
Verizon Communications Inc 1.75%
Intel Corp 1.71%
Cisco Systems Inc 1.69%

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 Holdings Weight
AMC Entertainment Holdings Inc Class A 1.06%
Tenet Healthcare Corp 0.47%
Stag Industrial Inc 0.47%
Ovintiv Inc 0.45%
EMCOR Group Inc 0.42%
Valley National Bancorp 0.37%
Chesapeake Energy Corp Ordinary Shares – New 0.37%
Agree Realty Corp 0.36%
Macy’s Inc 0.35%
Essent Group Ltd 0.35%

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%.

Risk Analysis

VYM IWN
Mean Return 1.04 1.01
R-squared 88.88 72.64
Std. Deviation 12.69 19.28
Alpha -0.7 -6.32
Beta 0.88 1.21
Sharpe Ratio 0.93 0.59
Treynor Ratio 13.24 8.3

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.

Performance

Annual Returns

VYM vs. IWN - Annual Returns

Year VYM IWN
2020 1.14% 4.5%
2019 24.2% 22.17%
2018 -5.87% -12.94%
2017 16.42% 7.73%
2016 16.87% 31.64%
2015 0.33% -7.53%
2014 13.47% 4.13%
2013 30.26% 34.3%
2012 12.68% 17.92%
2011 10.5% -5.64%
2010 14.17% 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

Fund Initial Balance Final Balance CAGR
VYM $10,000 $33,914 12.20%
IWN $10,000 $28,189 10.96%

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.


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