VYM vs. IWP: What’s The Difference?

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

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

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

Summary

VYM IWP
Name Vanguard High Dividend Yield Index Fund ETF Shares iShares Russell Mid-Cap Growth ETF
Category Large Value Mid-Cap Growth
Issuer Vanguard iShares
AUM 48.5B 15.7B
Avg. Return 12.20% 16.75%
Div. Yield 2.79% 0.26%
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 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%.

VYM’s dividend yield is 2.53% higher than that of IWP (2.79% vs. 0.26%). Also, VYM yielded on average 4.55% less per year over the past decade (12.20% vs. 16.75%). The expense ratio of VYM is 0.18 percentage points lower than IWP’s (0.06% vs. 0.24%).

Fund Composition

Industry Exposure

VYM vs. IWP - Industry Exposure

VYM IWP
Technology 9.77% 33.88%
Industrials 10.14% 14.09%
Energy 7.12% 1.51%
Communication Services 5.91% 6.32%
Utilities 7.27% 0.16%
Healthcare 13.61% 16.79%
Consumer Defensive 14.13% 2.32%
Real Estate 0.02% 2.46%
Financial Services 22.05% 4.52%
Consumer Cyclical 5.57% 16.09%
Basic Materials 4.41% 1.86%

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 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%.

VYM is 17.53% more exposed to the Financial Services sector than IWP (22.05% vs 4.52%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 11.81% higher and 3.18% lower respectively (14.13% vs. 2.32% and 13.61% vs. 16.79%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 8.38% less of the fund’s holdings compared to IWP (15.89% vs. 24.27%).

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%.

IWP - Holdings

IWP Holdings Weight
IDEXX Laboratories Inc 1.3%
DocuSign Inc 1.3%
Roku Inc Class A 1.29%
Match Group Inc 1.06%
Chipotle Mexican Grill Inc 1.06%
Pinterest Inc 1.05%
Veeva Systems Inc Class A 1.04%
Palantir Technologies Inc Ordinary Shares – Class A 1.04%
Lululemon Athletica Inc 1.01%
DexCom Inc 1.0%

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%.

Risk Analysis

VYM IWP
Mean Return 1.04 1.27
R-squared 88.88 87.01
Std. Deviation 12.69 16.05
Alpha -0.7 -1.03
Beta 0.88 1.1
Sharpe Ratio 0.93 0.91
Treynor Ratio 13.24 12.98

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

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

VYM’s Mean Return is 0.23 points lower than that of IWP and its R-squared is 1.87 points higher. With a Standard Deviation of 12.69, VYM is slightly less volatile than IWP. The Alpha and Beta of VYM are 0.33 points higher and 0.22 points lower than IWP’s Alpha and Beta.

Performance

Annual Returns

VYM vs. IWP - Annual Returns

Year VYM IWP
2020 1.14% 35.29%
2019 24.2% 35.14%
2018 -5.87% -4.95%
2017 16.42% 24.98%
2016 16.87% 7.15%
2015 0.33% -0.39%
2014 13.47% 11.68%
2013 30.26% 35.44%
2012 12.68% 15.62%
2011 10.5% -1.82%
2010 14.17% 26.1%

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 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

VYM vs. IWP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VYM $10,000 $33,914 12.20%
IWP $10,000 $50,191 16.75%

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 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%.

VYM’s CAGR is 4.55 percentage points lower than that of IWP and as a result, would have yielded $16,277 less on a $10,000 investment. Thus, VYM performed worse than IWP by 4.55% annually.


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