IWD vs VBR: a lower fee does not buy the other value portfolio
On price, Vanguard's small-cap value fund fell 25.1% from a peak over roughly five years through Oct. 30, 2026, against 20.2% for the iShares Russell 1000 Value fund.
Key takeaways
Both funds are labeled value, which is why you would put them side by side. The lower fee on Vanguard Morningstar Small-Cap Value ETF VBR does not buy the portfolio in BlackRock's iShares Russell 1000 Value ETF IWD.
On Sept. 30, 2026, Amazon, Apple and Microsoft were 17.39% of IWD. They sit in a value fund because the Russell 1000 Value Index does not require a stock to be pure value. When a company scores as both growth and value, FTSE Russell's ground rules, updated in August 2026, assign it a weight in the Russell 1000 Value Index and in the Russell 1000 Growth Index, in proportion to those scores.
On the iShares fact sheet, Amazon was 6.09% of IWD, Apple 6.06% and Microsoft 5.24%. The price-to-earnings ratio was 22.87 and the price-to-book ratio was 3.27.
Vanguard put VBR's largest holding, Moderna, at 0.8%. Its price-to-earnings ratio was 15.6 and its price-to-book ratio was 1.9.
IWD charges 0.18% a year. VBR charges 0.05%. The gap is 0.13 percentage points, or $13 a year on $10,000.
Over the year ended Sept. 30, IWD's net asset value returned 23.59% and VBR's returned 12.85%.
What IWD and VBR hold
IWD has tracked the Russell 1000 Value Index since May 22, 2000. On July 29, 2026, Vanguard renamed VBR and its index. The Morningstar US Small Cap Value Index is the old Center for Research in Security Prices small-cap value index under a new name.
VBR has followed that index, under both names, since 2013. Vanguard said in April 2026 that the name change would not affect the fund's objective or how it is managed.
As of the Nov. 1, 2026 holdings, 71% of VBR is in companies IWD also owns. IWD holds a typical shared company at about one-eighth of VBR's weight.
None of VBR's 10 largest reaches IWD's smallest of the ten
On Sept. 30, iShares put 29.81% of IWD in its 10 largest holdings, and reported 870 holdings in all. Vanguard put 5.7% of VBR in its 10 largest, and reported 820 stocks. No VBR holding reached 1%.
Why the returns split
The gap belongs to the indexes. Over the year ended Sept. 30, the Russell 1000 Value Index returned 23.81%. VBR's benchmark returned 12.90%. For every window below, that benchmark is the Morningstar US Small Cap Value Index, which the fund has tracked since 2013. IWD finished 0.22 percentage points behind its index. VBR finished 0.05 percentage points behind its own.
The gap between the funds was 10.74 percentage points. The gap between the indexes was 10.91.
Returns are net asset value total returns through Sept. 30, 2026. Figures past one year are annualized. Assets are the ETF itself, from the same fact sheets. VBR's full fund, including its mutual-fund share classes, held $64.1 billion.
The annualized lead narrows with the window, to 1.37 percentage points a year over ten. It is not a law. In 2023, VBR returned 16.00% and IWD returned 11.31%, at net asset value.
When to buy IWD or VBR
IWD averaged $557 million of shares a day over the 20 sessions through Oct. 30, 2026. VBR averaged $59 million.
Over roughly five years of daily prices through Oct. 30, 2026, VBR's annualized price volatility was 19.4% and its deepest price decline from a peak was 25.1%. IWD's were 14.7% and 20.2%.
VBR swung wider and fell further from a peak
- IWD
- VBR
- Volatility
- IWD 14.7%
- VBR 19.4%
- Max drawdown
- IWD −20.2%
- VBR −25.1%
If the job is large- and mid-cap value, including the slice of Amazon, Apple and Microsoft that the Russell 1000 Value Index scores as value, IWD is the fund. If you already hold those three companies in a broad U.S. stock fund and want smaller companies at 15.6 times earnings, VBR is the fund.
You would be taking the deeper decline and the wider swings. Paying 0.13 percentage points less does not buy the other portfolio.
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