Both Vanguard and iShares are two of the biggest ETF providers in the world in terms of AUM(Asset Under Management) . We will compare few iShares ETF vs Vanguard ETF and see what an investor should choose.
iShares by Blackrock is a bigger company or say it has more market share about 40% . One of the reasons for that is , it just offers more ETF’s and more selections than vanguard .
Lets Compare iShares ETF vs Vanguard ETF and compare the expense ratio they charge which is really an important parameter
Same Index Tracker ETFs:
Some ETFs from both Companies are tracking Index . If an ETF is tracking Index exactly the same way then one of the main things you’re going to check is the expense ratio, how much they’re charging you for that Market Tracker.
Let’s just look at the main event, the S&P 500 trackers which is obviously attracting the most assets and the most investment . Most people are buying and holding this type of ETF .
Like other Providers , Both Vanguard and iShares also provide these as well , essentially covering the 500 leading shares in America. If you look how these two are positioned , you will see they are exactly the same, they are both tracking exactly the same thing.
The job of an index tracker is to simply track one for one. In this case of S&P 500 , we can see the performance of them is exactly the same .
When you’re looking at index trackers , the main thing is to look at Expense Ratio,
How much ETFs are charging you , obviously if the price movements are exactly the same then the one that charges you less money to actually have it, is obviously going to be the winner.
Somewhat surprisingly when we checked the expense ratio, you will see both of them are charging you 0.03% .
Competition is working pretty well in the market here , both of them charge you the same expense ratio and both trade under the same exchange. Both of them are priced same about $300, in fact the vanguard ETF is a little bit cheaper per share compared to the iShares.
Other Types of ETFs
Both iShares and Vanguard have lots of other ETFs that they have and where index covering is not the same . The make up of the fund from each of them isn’t the same , they’re not exactly the same so you can’t really compare them one for one .
Both have various different ETFs with different amounts of risk that has a different investment outcome & different investment returns .
Example is an ETF from Vanguard, what they call under their select ETFs and are very popular amongst their clients .
This is the VXF which is more of a small and midcap ETF . Within this fund, there are about 3000 shares. This fund is really trying to track smaller companies i.e. United states domestic companies .
In case of an iShares they do not have an ETF that is exactly the same as this one but you can choose something that is kind of close in terms of the companies that it holds. Investment index would remain different, like Russell 1000 growth ETF from iShares , you might get you more or less same compared to Vanguard VXF in terms of risk and investment outcomes .
iShares ETF (IWF) is different , tracks large cap companies, that you would know like Microsoft and Visa whereas the vanguard account doesn’t do that it just focuses on small cap companies.
With this we can say iShares account is slightly less risky because it has some slightly higher capitalize companies which are considered less risky than small cap companies.
They also have different exposures in the fund, in terms of which sets are there exposed to more than others, so even though they might be in the same, concerns of their investment outcomes , the risk and the returns are simply going to be different between them.
The way that you may compare things like this is on average returns you got over . Five years Return will tell you, how the ETF is performing overtime . Ten years would be even better .
It is almost impossible to compare them one for one you have to look at the expense ratio of ETF and annual returns over a 10 year period, and really choose what you think is the best that fits your investment outcomes and your risk level .
In case of index tracking ETF , for example if you have an S&P 500 index tracker, you should get exactly the same results from the ETF’s . While selecting ETFs , it would come down to which one is cheaper to hold and which one has the lowest expense ratio
But in Case when the ETF’s are not the same then the expense ratios sort of becomes irrelevant, it really does matter, it’s about the return of the fund the total refund return of that funds overtime and that’s how you really should be looking at now .
With iShares you also get a much bigger selection and bigger diversity in the talent of ETFs that they provide more ETFs than Vanguard .
With Vanguard, it really offers the core and the basics and actually have a really good reputation overall just for having extremely low expense ratios which definitely is a good thing.
Both iShares and Vanguard are great, they offer pretty low fees these days when it comes to the basics and at the high turnovers. iShares offers you sometimes very specific ETF’s as well which you may want to look out which one is best in term of your preference.
I don’t really think there is a best way to compare , they both are very competitive and really best.
Hope this article iShares ETF vs Vanguard would have clarified your questions , do read our other article https://equitygyan74899394.wordpress.com/2021/11/04/bmo-etf-vs-ishares/