IWF owns the expensive half of the Russell 1000, screening for companies with high price-to-book ratios and strong historical sales growth. This creates a portfolio dominated by tech giants and other momentum stocks that the market believes will keep growing faster than average.
How It Works
The fund tracks the Russell 1000 Growth Index, which splits the large-cap universe based on three factors: price-to-book ratio, medium-term sales growth, and earnings growth forecasts. Companies scoring highest on these growth metrics get full weight, while those in the middle get partial allocation. The index reconstitutes annually in June, creating significant turnover as companies rotate between growth and value classifications.
Key Features
- Tech concentration often exceeds 40%, making it a quasi-sector bet compared to S&P 500's ~30%
- Lower expense ratio (0.19%) than most actively managed growth funds targeting similar stocks
- Pure-play growth exposure without the value stocks that dilute growth characteristics in broad market funds
Risks
- Growth stocks can lose 40-50% in bear markets when investors flee to value and quality
- Concentration risk with top 10 holdings often representing 45%+ of the portfolio
- Higher volatility than broad market with 20-30% greater standard deviation historically
Who Should Own This
Best suited for investors with 10+ year horizons who want concentrated exposure to America's fastest-growing large companies and can stomach significant drawdowns. Works as a core equity holding for growth-oriented portfolios or as a 20-30% satellite position to tilt a balanced portfolio toward growth without picking individual stocks.