How does a higher expense ratio affect long-term returns?

An expense ratio is an annual fee deducted from a fund’s assets. A higher expense ratio reduces the amount of money that remains invested and grows. Even small differences can accumulate over time because the fee is deducted every year. For example, IWM has an expense ratio of 0.19%, while VTWO has an expense ratio of 0.06%. This 0.13 percentage point difference may seem small each year, but over many years it can meaningfully reduce the potential growth of an investment when comparing otherwise similar funds.

What are the main cost differences between IWM and VTWO?

The most direct cost comparison between these funds is their expense ratios. IWM charges an expense ratio of 0.19% per year, whereas VTWO charges an expense ratio of 0.06% per year. This means IWM’s stated annual fee is 0.13 percentage points higher than VTWO’s. Lower expense ratios are often important to investors because fees are paid from fund assets, regardless of whether the fund makes a gain or a loss, so they can have a steady effect on long-term outcomes.

What are the differences between IWM and VTWO?

The main differences lie in fees, size, track record and dividend yield. IWM has a larger asset base of $77.2 billion compared to VTWO's $16.9 billion, potentially offering deeper liquidity. However, IWM charges a higher expense ratio of 0.19% versus VTWO's 0.06%. Additionally, IWM has a longer history since 2000, while VTWO launched in 2010. VTWO also offers a slightly higher dividend yield of 1.13% compared to IWM's 0.96%.

What do small blend category and Russell 2000 mean?

Both funds belong to the small blend category, which refers to investments in smaller companies with mixed characteristics, not just low-priced stocks. The Russell 2000 is a specific stock market index that tracks the performance of 2,000 small capitalisation firms. The fund names reference this index. However, the data does not specify if either fund uses a particular index tracking method.

What types of investing goals do IWM and VTWO typically align with?

Both funds align with the goal of gaining broad exposure to the U.S. small-cap equity market. Investors choose funds like these when they want a diversified holding in thousands of smaller companies rather than picking individual stocks. IWM is often considered for traders who prioritise high liquidity for active strategies, while VTWO is typically looked at by long-term investors who prioritise lower expense ratios to minimise fee drag over time.

Do IWM and VTWO hold similar companies?

Yes, IWM and VTWO hold very similar companies. Both funds have 7 companies appearing in their respective top ten lists, including TWST, MOG.A, FROG, UMBF, BTSG, GKOS, and CYTK. The holding weights are very close. For example, FROG is 0.33% in IWM and 0.34% in VTWO. This high overlap suggests both funds provide essentially the same core portfolio of smaller businesses.

What is a dividend yield, and which of these two funds has a higher yield?

A dividend yield is an annual income return on an investment, usually expressed as a percentage of its current market price. When a fund earns dividends from its underlying stocks, it often distributes some or all of this income to shareholders. VTWO has a dividend yield of 1.13%, which is higher than IWM's 0.96%. For income-focused investors, this difference may be relevant, though it is generally smaller in impact than the fee differences over very long periods.

How do the net assets of these ETFs differ?

The fund size, or net assets, differs significantly. IWM has approximately $77.2 billion in net assets, reflecting its status as one of the largest ETFs available. In contrast, VTWO has about $16.9 billion in net assets. While both are substantial funds, IWM's larger asset base suggests it may have more trading activity and higher liquidity, which can be relevant for large institutional trades or those who need to buy and sell quickly.

Why do inception dates matter for ETFs?

An inception date is when an ETF was created and began trading. IWM has been active since 22 May 2000, giving it over two decades of market history. This includes periods of significant volatility. VTWO, launched on 20 September 2010, is younger and has existed through a different economic environment. Investors often look at longer track records for more context on how a fund has historically tracked its benchmark or managed extreme market movements, though past performance does not guarantee future results.

What does 'tight bid-ask spreads' mean in this context?

A 'bid-ask spread' is the difference between the highest price a buyer is willing to pay (the bid) and the lowest price a seller is willing to accept (the ask) for a financial asset. A 'tight' spread means this gap is small. This is a positive for investors because it reduces the cost and friction of trading. High trading volume and large asset bases, like IWM's $77.2 billion, typically support tight spreads.

IWM vs VTWO

Two funds, one decision: we compare cost, performance and what each ETF actually holds in September 2026.

This page compares iShares Russell 2000 ETF (IWM) and Vanguard Russell 2000 ETF (VTWO) across fees, holdings and dividends. IWM has a 0.19% expense ratio versus 0.06% for VTWO, while net assets are $77.2 billion versus $16.9 billion. The funds hold seven shared top-10 positions. Index tracking methods are not available in the source data. Educational content, not financial advice.

Fund Snapshot

Key Fund Metrics

IWM

Metric

VTWO

0.19%

Expense Ratio

0.06%

0.96%

Dividend Yield

1.13%

$77.19B

Net Assets

$16.86B

1,990

Holdings

2,002

May 22, 2000

Inception Date

Sep 20, 2010

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Index Tracked

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Small Blend

Fund Category

Small Blend

VTWO costs about $13.00 less per year for every $10,000 invested.

Shared Top Holdings

Holding	IWM	VTWO
TWSTTwist Bioscience Corporation	0.36%	0.28%
MOG.AMoog Inc.	0.34%	0.33%
FROGJFrog Ltd.	0.33%	0.34%
UMBFUMB Financial Corporation	0.33%	0.33%
BTSGBrightSpring Health Services, Inc.	0.31%	0.30%
GKOSGlaukos Corporation	0.31%	0.32%
CYTKCytokinetics, Incorporated	0.30%	0.29%

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IWM vs SCHA

Compare IWM and SCHA ETFs on expense ratios, dividend yields, top holdings and small-cap tracking methods to assess factual differences and suitability.

VB vs VTWO

Compare VB and VTWO, two Vanguard small-cap ETFs. Review 0.03% vs 0.06% fees, holdings, yields, and tracking differences for informed research.

Investment Analysis

IWM

Pros

IWM's substantial assets and liquidity ensure tight bid-ask spreads for large trades.
A long history since 2000 demonstrates the fund's resilience and stability.
Diversified top holdings avoid significant single-name concentration risk in the fund.

Considerations

Its expense ratio of 0.19 percent is notably higher than comparable Vanguard fund.
A low dividend yield of 0.96 percent may not appeal to income-focused investors.
Provided data omits tracked index and sector weights, hindering transparency assessment.

VTWO

Pros

Its 0.06 percent expense ratio is a key advantage for cost-conscious investors.
Vanguard's strong reputation for investor-friendly practices and low costs is relevant.
A dividend yield of 1.13 percent is higher than the comparable iShares fund.

Considerations

Its smaller net assets mean it lacks the liquidity depth of the largest fund.
Inception in 2010 means it has a less extensive track record.
Provided data omits tracked index and sector weights, hindering transparency assessment.

About IWM and VTWO

IWM (IWM)

The iShares Russell 2000 ETF (IWM) is a well-established exchange-traded fund designed to track the performance of small-cap stocks in the United States. Launched in May 2000, it offers investors broad exposure to a diverse range of smaller companies, often characterised by higher growth potential compared to large-cap giants. With net assets exceeding USD 77 billion and nearly 2,000 holdings, it provides significant diversification within the small-cap sector. The fund operates with an expense ratio of 0.19% and currently reports a dividend yield of 0.96%. While small-cap stocks can offer attractive opportunities during economic expansions, they may also experience greater volatility and sensitivity to interest rate changes than larger, more established firms. This ETF is generally considered suitable for investors seeking exposure to the US small-cap market as part of a diversified portfolio, bearing in mind that the value of investments can fall as well as rise and past performance is not a reliable indicator of future results.

VTWO (VTWO)

The Vanguard Russell 2000 ETF aims to track the performance of small-cap companies in the United States. With an expense ratio of just 0.06%, it offers a cost-effective way for investors to gain broad exposure to this sector. The fund holds over 2,000 securities, providing diversification across many different small businesses. Since its inception in September 2010, it has grown to manage approximately USD 16.86 billion in net assets. It currently offers a dividend yield of 1.13%, which may fluctuate based on market conditions and company payouts. As with any investment involving small-cap stocks, values can be more volatile than those of larger companies, so it's important to consider your personal risk tolerance. This ETF is designed for general educational purposes to help you understand how small-cap market segments operate within a portfolio.

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IWM vs VTWO

Fund Snapshot