Long-Term Mid-Cap ETF Selection for Growth: Why IJH Outshines IWR in Cost Efficiency and Risk-Adjusted Returns

For investors seeking long-term growth in mid-cap equities, the choice between the iShares Core S&P Mid-Cap ETF (IJH) and the iShares Russell Mid-Cap ETF (IWR) hinges on two critical factors: cost efficiency and risk-adjusted returns. While both ETFs track mid-cap indices, their structural and performance differences reveal a clear advantage for IJH in the context of sustained portfolio growth.

Cost Efficiency: IJH’s Unmatched Edge

The expense ratio is a foundational metric for evaluating ETFs, as it directly impacts net returns over time. According to a report by Tickeron, IJH carries an expense ratio of 0.05%, significantly lower than IWR’s 0.18% [2]. This 0.13% difference may seem small, but over a 20-year period, it could erode approximately 3.2% of cumulative returns in a hypothetical $100,000 portfolio, assuming annual compounding [4]. For long-term investors, minimizing fees is a strategic imperative, and IJH’s cost structure aligns with this principle.

Risk-Adjusted Returns: A Nuanced Debate

The Sharpe ratio, a key measure of risk-adjusted performance, reveals a more complex picture. As of September 3, 2025, IWR’s 3-year Sharpe ratio stands at 0.64, according to PortfoliosLab [1], while IJH’s is reported at 0.34 [1]. However, this discrepancy must be contextualized. IWR’s higher Sharpe ratio reflects its broader exposure to larger-cap names within the mid-cap space, which may reduce volatility but also limit growth potential in a rising market [3]. Conversely, IJH’s slightly lower Sharpe ratio is offset by its 1.05 beta and 19.63% standard deviation, indicating moderate volatility aligned with market cycles [4]. For growth-oriented investors, this volatility is not a drawback but a feature, as mid-cap stocks historically outperform during economic expansions.

Performance and Volatility: Balancing the Equation

Year-to-date (YTD) returns as of July 22, 2025, show IWR outpacing IJH with a 6.9% price return versus IJH’s 2.5% [3]. While this short-term edge favors IWR, it does not necessarily translate to long-term superiority. Mid-cap ETFs are inherently cyclical, and IJH’s focus on the S&P MidCap 400—a market-cap-weighted index with a tilt toward more established mid-cap firms—may offer steadier growth during recovery phases. Additionally, IJH’s lower expense ratio amplifies its appeal for investors prioritizing compounding efficiency over fleeting performance spikes.

Conclusion: IJH as the Long-Term Growth Champion

While IWR’s higher Sharpe ratio and recent YTD outperformance are notable, IJH’s superior cost efficiency and strategic alignment with mid-cap growth dynamics make it the more compelling choice for long-term investors. The 0.13% expense ratio advantage, combined with its moderate volatility and market exposure, positions IJH to deliver consistent, compounding returns over decades. For those prioritizing risk-adjusted growth without sacrificing cost discipline, IJH emerges as the clear winner in the mid-cap ETF arena.

**Source:[1] iShares Russell Midcap ETF (IWR) - Stock Analysis, [https://portfolioslab.com/symbol/IWR][2] IJH vs IWR - Comparison tool, [https://tickeron.com/compare/IJH-vs-IWR/][3] Mid- and Small-Cap ETFs: S&P DJI Indices Trail Peers in ..., [https://www.wealthmanagement.com/etfs/mid-small-cap-etfs-tracking-s-p-dji-indices-trail-their-peer-index-funds-in-2025-ytd][4] Should iShares Core S&P Mid-Cap ETF (IJH) Be on Your ..., [https://finance.yahoo.com/news/ishares-core-p-mid-cap-102004816.html]