IWV: Future Performance Will Likely Remain Slightly Inferior To The S&P 500 Index

seekingalpha06-02

Torsten Asmus Introduction Back in March 2023, we wrote an analysis on iShares Russell 3000 ETF (NYSEARCA:IWV). At that time, we noted that IWV was still expensive relative to the historical valuation...

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At that time, we noted that IWV was still expensive relative to the historical valuation...</p>\n\n<a href=\"https://seekingalpha.com/article/4696987-iwv-future-performance-slightly-inferior-to-sp500-index\">Source Link</a>\n\n</div>\n","source":"seekingalpha_fund","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>IWV: Future Performance Will Likely Remain Slightly Inferior To The S&P 500 Index</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIWV: Future Performance Will Likely Remain Slightly Inferior To The S&P 500 Index\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-06-02 22:27 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4696987-iwv-future-performance-slightly-inferior-to-sp500-index><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Torsten Asmus Introduction Back in March 2023, we wrote an analysis on iShares Russell 3000 ETF (NYSEARCA:IWV). At that time, we noted that IWV was still expensive relative to the historical valuation...</p>\n\n<a href=\"https://seekingalpha.com/article/4696987-iwv-future-performance-slightly-inferior-to-sp500-index\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4581","symbol_name":"高盛持仓","start_time":0,"source_url":"https://seekingalpha.com/article/4696987-iwv-future-performance-slightly-inferior-to-sp500-index","article_id":"2440512497","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1706231587/image_1706231587.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2440512497","pubTimestamp":1717338463,"columns":[],"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Torsten Asmus Introduction Back in March 2023, we wrote an analysis on iShares Russell 3000 ETF (NYSEARCA:IWV). 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At that time, we noted that IWV was still expensive relative to the historical valuation range in the past 2 decades. It has been over a year since we last covered this fund, we think it is time for us to analyze it again and provide our suggestions. ETF Overview IWV has a portfolio of largest 3,000 U.S. stocks by market capitalization. The fund is a good representation of the broader U.S. stock market than the S&P 500 index, which only includes 500 stocks. However, it has produced slightly inferior returns than the S&P 500 index in the past, and will likely deliver inferior returns in the future. Its valuation is more expensive than last year. In addition, there are other funds that track similar index with lower expense ratio. Hence, we think investors may want to seek an alternative fund instead.   YCharts Fund Analysis IWV’s momentum continues in 2024 Let us first check how IWV performed in the past year. Since IWV’s fund price reached its cyclical low in October 2022, the fund has delivered a strong total price return of 44.5%. This result was good, but still not good enough when we compared to the S&P 500 index. As the chart below shows, the S&P 500 index delivered a total return of 47.3% in the same period, nearly 3 percentage points higher than IWV.   YCharts IWV may slightly underperform the S&P 500 index in the future As we have discussed in our analysis of IWV last year, IWV has trailed the S&P 500 index slightly over the long run as well. In fact, the fund’s total return of 208.3% in the past 10 year was 22 percentage points behind the S&P 500 index’s 230.3%.   YCharts This underperformance was likely due to IWV’s inclusion of mid-cap and small-cap stocks. Since IWV includes 3,000 largest stocks in the U.S. by market capitalization, it will include more mid-cap stocks than the S&P 500 index, which only includes 500 large-cap stocks. Below is a chart that shows the stock style of IWV. As can be seen from the chart below, large-cap stocks only represent 73% of IWV’s total portfolio. Medium and small-cap stocks represent 19% and 8% of the total portfolio, respectively.   Morningstar The consequence of owning medium and small-cap stocks is that it will impact its long-term performance. This is because mid-cap and small-cap stocks tend to deliver inferior long-term returns than large-cap stocks. As can be seen from the chart below, S&P 500 index (large-cap) has outperformed the S&P 400 (mid-cap) and S&P 600 (small-cap) indices in the past 15 years. This explains why IWV has delivered slightly inferior returns than the S&P 500 index in the past. If this trend continues, we may continue to see IWV’s fund price underperform the S&P 500 index in the future.   YCharts IWV is more expensive than last year Let us now check IWV’s valuation. Since IWV had a spectacular run in the past year, we expect its valuation to be much higher than last year. Since we have used the Shiller P/E ratio to evaluate the valuation last year, we will use the Shiller P/E ratio for the S&P 500 index to compare its valuation again. For reader’s information, Shiller P/E ratio for the S&P 500 index basically calculates the P/E ratio based on average inflation-adjusted earnings of the S&P 500 index from the previous 10 years. Since both the Russell 3000 index and the S&P 500 index have similar performance and market trends (though one is slightly inferior than the other one), and both covers 98% and 80% of the total U.S. market by capitalization, it is a good tool to check to see if IWV is expensive or not. In the past 20 years, the Schiller P/E ratio for the S&P 500 index has typically been in the range between 20x and 32x. As can be seen from the chart below, the current Schiller P/E ratio is at 34.1x, much higher than the typical valuation range between 20x and 32x. This ratio is also not far from the peak of about 37x reached during the pandemic. Hence, we think IWV is quite expensive now.   GuruFocus Expense ratio higher than its peer Another downside of owning IWV is its expense ratio. In fact, its expense ratio of 0.2% is higher than the expense ratio of 0.1% of its peer fund Vanguard Russell 3000 ETF (VTHR), which also tracks the Russell 3000 Index. While this difference may be quite small, it can still result in several percentage difference in their performance over the long run. This is exactly the case. As can be seen from the chart below, IWV’s total return of 460.8% trailed VTHR’s 469.2% since 2010.   YCharts Investor Takeaway Based on our analysis, it appears that IWV will continue to underperform the S&P 500 index in the long run. In addition, IWV also has higher expense ratio than its peer fund. Therefore, we do not recommend investors to own this fund at the moment.  Additional Disclosure: This is not financial advice and that all financial investments carry risks. Investors are expected to seek financial advice from professionals before making any investment.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2440512497"}