BSV vs. IWB: What’s The Difference?

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the iShares Russell 1000 ETF (IWB) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and IWB is a iShares Large Blend fund. So, what’s the difference between BSV and IWB? And which fund is better?

The expense ratio of BSV is 0.10 percentage points lower than IWB’s (0.05% vs. 0.15%). BSV is mostly comprised of AAA bonds while IWB has a high exposure to the technology sector. Overall, BSV has provided lower returns than IWB over the past ten years.

In this article, we’ll compare BSV vs. IWB. We’ll look at holdings and portfolio growth, as well as at their risk metrics and fund composition. Moreover, I’ll also discuss BSV’s and IWB’s annual returns, industry exposure, and performance and examine how these affect their overall returns.

Summary

BSV IWB
Name Vanguard Short-Term Bond Index Fund ETF Shares iShares Russell 1000 ETF
Category Short-Term Bond Large Blend
Issuer Vanguard iShares
AUM 67.71B 30.54B
Avg. Return 2.27% 14.64%
Div. Yield 1.48% 1.14%
Expense Ratio 0.05% 0.15%

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) is a Short-Term Bond fund that is issued by Vanguard. It currently has 67.71B total assets under management and has yielded an average annual return of 2.27% over the past 10 years. The fund has a dividend yield of 1.48% with an expense ratio of 0.05%.

The iShares Russell 1000 ETF (IWB) is a Large Blend fund that is issued by iShares. It currently has 30.54B total assets under management and has yielded an average annual return of 14.64% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.15%.

BSV’s dividend yield is 0.34% higher than that of IWB (1.48% vs. 1.14%). Also, BSV yielded on average 12.36% less per year over the past decade (2.27% vs. 14.64%). The expense ratio of BSV is 0.10 percentage points lower than IWB’s (0.05% vs. 0.15%).

Fund Composition

Holdings

BSV - Holdings

BSV Bond Sectors Weight
AAA 71.65%
BBB 13.08%
A 11.95%
AA 3.28%
Others 0.03%
Below B 0.01%
B 0.0%
BB 0.0%
US Government 0.0%

BSV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 71.65%, 13.08%, 11.95%, 3.28%, and 0.03%. The fund is less weighted towards Below B (0.01%), B (0.0%), and BB (0.0%) rated bonds.

IWB - Holdings

IWB Holdings Weight
Apple Inc 5.45%
Microsoft Corp 5.11%
Amazon.com Inc 3.43%
Facebook Inc Class A 2.03%
Alphabet Inc Class A 1.93%
Alphabet Inc Class C 1.82%
Tesla Inc 1.27%
Berkshire Hathaway Inc Class B 1.24%
NVIDIA Corp 1.11%
JPMorgan Chase & Co 1.09%

IWB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.45%, 5.11%, 3.43%, 2.03%, and 1.93%.

Alphabet Inc Class C (1.82%), Tesla Inc (1.27%), and Berkshire Hathaway Inc Class B (1.24%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the IWB’s holdings at 1.11% and 1.09%.

Risk Analysis

BSV IWB
Mean Return 0.16 1.27
R-squared 78.38 99.73
Std. Deviation 1.33 13.87
Alpha 0.21 -0.38
Beta 0.38 1.02
Sharpe Ratio 0.98 1.05
Treynor Ratio 3.33 14.31

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Alpha of 0.21 with a R-squared of 78.38 and a Beta of 0.38. Its Standard Deviation is 1.33 while BSV’s Treynor Ratio is 3.33. Furthermore, the fund has a Mean Return of 0.16 and a Sharpe Ratio of 0.98.

The iShares Russell 1000 ETF (IWB) has a R-squared of 99.73 with a Mean Return of 1.27 and a Beta of 1.02. Its Alpha is -0.38 while IWB’s Standard Deviation is 13.87. Furthermore, the fund has a Treynor Ratio of 14.31 and a Sharpe Ratio of 1.05.

BSV’s Mean Return is 1.11 points lower than that of IWB and its R-squared is 21.35 points lower. With a Standard Deviation of 1.33, BSV is slightly less volatile than IWB. The Alpha and Beta of BSV are 0.59 points higher and 0.64 points lower than IWB’s Alpha and Beta.

Performance

Annual Returns

BSV vs. IWB - Annual Returns

Year BSV IWB
2020 4.67% 20.8%
2019 4.92% 31.26%
2018 1.34% -4.91%
2017 1.2% 21.53%
2016 1.42% 11.91%
2015 0.92% 0.82%
2014 1.32% 13.08%
2013 0.17% 32.93%
2012 1.98% 16.27%
2011 3.04% 1.36%
2010 4.0% 15.94%

BSV had its best year in 2019 with an annual return of 4.92%. BSV’s worst year over the past decade yielded 0.17% and occurred in 2013. In most years the Vanguard Short-Term Bond Index Fund ETF Shares provided moderate returns such as in 2018, 2016, and 2012 where annual returns amounted to 1.34%, 1.42%, and 1.98% respectively.

The year 2013 was the strongest year for IWB, returning 32.93% on an annual basis. The poorest year for IWB in the last ten years was 2018, with a yield of -4.91%. Most years the iShares Russell 1000 ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.08%, 15.94%, and 16.27% respectively.

Portfolio Growth

BSV vs. IWB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
BSV $10,000 $12,785 2.27%
IWB $10,000 $42,462 14.64%

A $10,000 investment in BSV would have resulted in a final balance of $12,785. This is a profit of $2,785 over 11 years and amounts to a compound annual growth rate (CAGR) of 2.27%.

With a $10,000 investment in IWB, the end total would have been $42,462. This equates to a $32,462 profit over 11 years and a compound annual growth rate (CAGR) of 14.64%.

BSV’s CAGR is 12.36 percentage points lower than that of IWB and as a result, would have yielded $29,677 less on a $10,000 investment. Thus, BSV performed worse than IWB by 12.36% annually.


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