IWM vs VTWO: Same Russell 2000 Index, Half the Fee
IWM and VTWO hold the identical Russell 2000 basket. The only real differences are cost and liquidity: VTWO is roughly half the price, while IWM has the deepest options and trading market of any small-cap ETF.
IWM (iShares Russell 2000 ETF) and VTWO (Vanguard Russell 2000 ETF) track the exact same index — the Russell 2000, the roughly 2,000 smallest companies in the Russell 3000. Their holdings and returns are effectively identical before costs. The decision therefore comes down to two things. First, fees: VTWO charges 0.10% versus IWM's 0.19%. On $100K held 20 years, that ~9 basis point gap compounds to roughly $2,000–$2,500 in extra fees for IWM, and because both funds hold the same stocks, that cost difference shows up almost directly as lower net return. Second, liquidity: IWM is one of the most-traded ETFs in the world with an enormous options market and razor-thin spreads, while VTWO trades far less and has slightly wider spreads. For a long-term buy-and-hold investor, VTWO is the clear pick — same exposure, lower drag. For active traders, hedgers, or anyone using options on the Russell 2000, IWM is worth its higher fee.
Whether the lower-cost fund suits your situation depends on your existing holdings, account type, tax situation, and how you use each fund. This is a cost comparison, not a personalized recommendation.
Both funds trade commission-free at every major brokerage. Where to buy them →
📋 IWM vs VTWO: Key Facts Side by Side
| Metric | IWM | VTWO |
|---|---|---|
| Fund Name | iShares Russell 2000 ETF | Vanguard Russell 2000 Index Fund ETF Shares |
| Issuer | iShares | Vanguard |
| Tracks Index | Russell 2000 | Russell 2000 |
| Expense Ratio | 0.19% | 0.10% ✓ |
| Cost per $10K/yr | $19.00 | $10.00 |
| AUM | $78.0B | $17.3B |
| Holdings | 2,000 | 2,000 |
| Inception | 2000 | 2010 |
| 1-Year Return | +13.44% | +13.37% |
| 3-Year Return | +21.88% | +22.06% |
| 5-Year Return | +5.79% | +5.95% |
| Dividend Yield | 0.98% | 1.21% |
| Holdings Overlap | See holdings overlap → | |
| Avg Bid-Ask Spread | 0.00% | 0.02% |
AUM and returns updated Nov 1, 2026 from ETF BFF database; expense ratios verified against issuer filings. Returns are annualised. Not investment advice.
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📊 IWM vs VTWO: Annualised Returns
Annualised returns (trailing, price-based). Past performance does not guarantee future results.
🎯 Which Fund Fits Which Investor?
- already use iShares and prefer staying within one fund family
- want the lowest fees: saves ~$9/yr per $10K vs IWM
- already use Vanguard and prefer staying within one fund family
💰 What the Fee Difference Actually Costs
Adjust the numbers for your situation. This models each fund's expense ratio compounding against your balance over time.
Assumes a constant annual return reinvested, with each fund's expense ratio deducted yearly. Illustrative only; actual returns vary. Past performance does not guarantee future results.
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