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BSV vs. IWR: What’s The Difference?

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

The expense ratio of BSV is 0.14 percentage points lower than IWR’s (0.05% vs. 0.19%). BSV is mostly comprised of AAA bonds while IWR has a high exposure to the technology sector. Overall, BSV has provided lower returns than IWR over the past ten years.

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

Introduction To Mutual Funds
Introduction To Mutual Funds
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Summary

BSVIWR
NameVanguard Short-Term Bond Index Fund ETF SharesiShares Russell Mid-Cap ETF
CategoryShort-Term BondMid-Cap Blend
IssuerVanguardiShares
AUM67.71B29.84B
Avg. Return2.27%14.15%
Div. Yield1.48%0.99%
Expense Ratio0.05%0.19%

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 Mid-Cap ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% with an expense ratio of 0.19%.

BSV’s dividend yield is 0.49% higher than that of IWR (1.48% vs. 0.99%). Also, BSV yielded on average 11.88% less per year over the past decade (2.27% vs. 14.15%). The expense ratio of BSV is 0.14 percentage points lower than IWR’s (0.05% vs. 0.19%).

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Fund Composition

Holdings

BSV - Holdings

BSV Bond SectorsWeight
AAA71.65%
BBB13.08%
A11.95%
AA3.28%
Others0.03%
Below B0.01%
B0.0%
BB0.0%
US Government0.0%

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.

IWR - Holdings

IWR HoldingsWeight
IDEXX Laboratories Inc0.51%
DocuSign Inc0.51%
Twitter Inc0.48%
Chipotle Mexican Grill Inc0.47%
Roku Inc Class A0.44%
Marvell Technology Inc0.44%
DexCom Inc0.44%
Trane Technologies PLC0.43%
MSCI Inc0.43%
Carrier Global Corp Ordinary Shares0.43%

IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.

Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.

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Risk Analysis

BSVIWR
Mean Return0.161.17
R-squared78.3891.52
Std. Deviation1.3315.66
Alpha0.21-2.8
Beta0.381.11
Sharpe Ratio0.980.86
Treynor Ratio3.3311.72

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

The iShares Russell Mid-Cap ETF (IWR) has a Alpha of -2.8 with a Mean Return of 1.17 and a Sharpe Ratio of 0.86. Its Treynor Ratio is 11.72 while IWR’s Standard Deviation is 15.66. Furthermore, the fund has a Beta of 1.11 and a R-squared of 91.52.

BSV’s Mean Return is 1.01 points lower than that of IWR and its R-squared is 13.14 points lower. With a Standard Deviation of 1.33, BSV is slightly less volatile than IWR. The Alpha and Beta of BSV are 3.01 points higher and 0.73 points lower than IWR’s Alpha and Beta.

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Performance

Annual Returns

BSV vs. IWR - Annual Returns

YearBSVIWR
20204.67%16.91%
20194.92%30.31%
20181.34%-9.13%
20171.2%18.32%
20161.42%13.58%
20150.92%-2.57%
20141.32%13.03%
20130.17%34.5%
20121.98%17.13%
20113.04%-1.67%
20104.0%25.25%

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 IWR, returning 34.5% on an annual basis. The poorest year for IWR in the last ten years was 2018, with a yield of -9.13%. Most years the iShares Russell Mid-Cap ETF has given investors modest returns, such as in 2016, 2020, and 2012, when gains were 13.58%, 16.91%, and 17.13% respectively.

Portfolio Growth

BSV vs. IWR - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
BSV$10,000$12,7852.27%
IWR$10,000$39,75114.15%

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 IWR, the end total would have been $39,751. This equates to a $29,751 profit over 11 years and a compound annual growth rate (CAGR) of 14.15%.

BSV’s CAGR is 11.88 percentage points lower than that of IWR and as a result, would have yielded $26,966 less on a $10,000 investment. Thus, BSV performed worse than IWR by 11.88% annually.


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