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-- Edit -- It turns out that the RPG fund creates an index of "pure-style growth" from the S&P 500/Citigroup PURE growth index, where the IVW ETF creates an index from the S&P 500/Citigroup growth index; sorry I missed that.

I'm trying to compare ETFs using etfdb.

I saw two ETFs that track identical indexes, but both have very different returns after 5 years:

IVW 5-year return was 125.43%, with an expense ratio of 0.18%.

RPG 5-year return was 183.31%, with an expense ratio of 0.35%.

Both of these ETFs track the S&P 500/Citigroup Growth Index.

I was under the impression that ETFs were passively managed, and therefor two ETFs tracking the same index would have the same return, less expense ratios. Is that an incorrect assumption--are (some) ETFs actively managed?

Is there something else that I'm not accounting for which would justify different returns for ETFS tracking identical indices?

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  • Are you aware of how ETFs handle the difference between the trading price and the underlying Net Asset Value? This could be worth noting as well as volume as thinly traded ETFs may have greater spreads to consider.
    – JB King
    Commented Jul 26, 2014 at 23:14
  • Another point is how well do you know the expense ratio was always what it is now for all 5 years?
    – JB King
    Commented Jul 26, 2014 at 23:19
  • @JBKing From what I gather, index funds post their NAV at the end of each trading day, whereas shares of an ETF float all day, tending to the NAV as arbitrage brings it in line. I don't get the spread concept for ETFs yet but will look into it.
    – Matthew Moisen
    Commented Jul 26, 2014 at 23:44
  • @JBKing I naively assumed the expense ratio had always been the same...
    – Matthew Moisen
    Commented Jul 26, 2014 at 23:45
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    Another reason could be if the ETF is capitalizing dividends or distributing dividends.
    – Maxime Vernier
    Commented Jul 27, 2014 at 9:35

2 Answers 2

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The top ten holdings for these funds don't overlap by even one stock. It seems to me they are targeting an index for comparison, but making no attempt to replicate a list of holdings as would, say, a true S&P index.

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  • Ah, I did some digging and learned that the RPG fund is a "pure-style" growth ETF, and then realized I missed the word pure in the name given on etfdb.
    – Matthew Moisen
    Commented Jul 27, 2014 at 1:16
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In your other question about these funds you quoted two very different yields for them. That pretty clearly says they are NOT tracking the same index.

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  • I'm not sure I follow. The other two questions which both feature these funds have the same 5-year return: 125.43% for IVW and 183.31% for RPG. Would you expand on what you mean?
    – Matthew Moisen
    Commented Jul 26, 2014 at 23:47
  • ETFDB states they track the same index. Here is the link for RPG: etfdb.com/etf/IVW/#fundamentals and here is the link for IVW: etfdb.com/etf/IVW/#fundamentals
    – Matthew Moisen
    Commented Jul 26, 2014 at 23:48
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    Yield differences could be from different expense ratios as well as possibly using different portfolios to mimic the index.
    – JB King
    Commented Jul 26, 2014 at 23:49
  • Expense ratios are often a better predictor of fund results within a category than anything else about the funds... which is one reason index funds (which typically have very low fees) do surprisingly well against more actively managed funds.
    – keshlam
    Commented Jul 27, 2014 at 5:08

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