The iShares Russell 1000 Growth ETF (NYSEARCA:IWF) has been the default large-cap growth vehicle for a generation of investors. In 2026, the Russell 1000 Growth index has stalled at -0.8% year-to-date, while the broader S&P 500 has managed only 13.39%.
Investors who own IWF for its growth tilt are treading water. A much smaller Vanguard fund running the opposite playbook has quietly delivered the performance IWF was supposed to provide this year.
What IWF Is Supposed to Do
The largest U.S. companies that score highest on growth factors are what IWF holds, which means the portfolio ends up dominated by Apple, Microsoft, NVIDIA, Amazon, Meta, and Alphabet. When those names lead the market, IWF outruns almost everything in sight. The fund offers an easy way to own the AI capex trade without picking individual winners.
The trouble in 2026 is that leadership has narrowed and paused. QQQ, the closest cousin to IWF’s exposure, is up 17.7% YTD, but that gain is concentrated in names outside IWF’s heaviest weights. J.P. Morgan’s 2026 outlook notes that 2026 Magnificent 7 earnings estimates have been revised up 3.4%, while S&P 493 estimates have been cut 1.2%, yet price performance has diverged from that setup. Growth’s earnings still lead, while price action this year has lagged.
The Alternative: Vanguard U.S. Value Factor ETF
The Vanguard U.S. Value Factor ETF (CBOE:VFVA) is an actively managed single-factor fund that ranks U.S. stocks on price-to-book, price-to-earnings, and other classic value measures. It goes beyond a standard value index, holding names across the market-cap spectrum. Where the Vanguard Value ETF (NYSEARCA:VTV) leans on large-cap value staples, VFVA reaches into mid-caps, small-caps, and cyclicals that most large-cap value funds screen out.
Performance this year reflects that reach. VFVA is up 22% YTD through August 7, versus VTV at 18.69% and the Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD) at 25.62%. Over one year, VFVA has returned 38.4%, ahead of the S&P 500’s 22.3%. The gap versus IWF is wider given IWF’s flat year.
CVS Health, Bristol-Myers Squibb, General Motors, EOG Resources, Cigna, FedEx, Elevance Health, and AT&T are among the top positions in VFVA, names that trade at single-digit or low-teens earnings multiples with real cash flow behind them. When growth multiples compress, and cyclicals catch a bid, those holdings tend to react. Investors gain exposure to the same U.S. equity market as IWF, but at a discount rather than a premium.
Cost, Size, and Oversight
At 0.13%, the expense ratio on VFVA is right in line with the cheapest factor products on the market. Assets under management sit near $755 million, with the most recent NPORT filing showing $825.86 million in net assets as of May 31, 2026. That is a fraction of IWF’s asset base and a fraction of VTV’s as well, which helps explain why VFVA remains overlooked despite its factor purity and Vanguard sponsorship.
The Tradeoffs
Deep-value factor funds accept tracking error against the S&P 500 as a design feature. VFVA holds 500-plus positions weighted by factor score rather than market cap, so its sector mix tilts hard toward energy, financials, health care, and traditional industrials. In periods when mega-cap growth reasserts leadership, VFVA lags, sometimes by wide margins. Its smaller AUM means slightly wider bid-ask spreads than the largest ETFs, though liquidity has been sufficient for retail-sized orders.
How the Swap Looks in Practice
In a tax-advantaged account, rotating some or all of an IWF position into VFVA is a same-day trade with no tax friction. In a taxable account, embedded gains in IWF from prior years make a full swap expensive. A partial rotation, or directing new contributions to VFVA rather than IWF, preserves the factor tilt without triggering unnecessary capital gains. Pairing VFVA with a growth or broad-market core is a common approach for investors who want value exposure without abandoning growth entirely.
Weighing the Decision
Concentrated large-cap growth is still what IWF delivers. The question is whether that concentration serves a given portfolio in a year when growth has stalled, and value has taken the lead. VFVA offers a specific, low-cost way to add the exposure that IWF cannot provide, at a fee that does not erode the factor edge.
Investors who hold IWF as their sole equity vehicle have the most to reconsider, while those who already own it as one sleeve of a diversified portfolio may find VFVA a useful complement rather than a replacement.
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