The iShares Core Dividend Growth ETF (DGRO) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. DGRO is a iShares Large Value fund and IEF is a iShares Long Government fund. So, what’s the difference between DGRO and IEF? And which fund is better?
The expense ratio of DGRO is 0.07 percentage points lower than IEF’s (0.08% vs. 0.15%). DGRO also has a high exposure to the technology sector while IEF is mostly comprised of AAA bonds. Overall, DGRO has provided higher returns than IEF over the past 6 years.
In this article, we’ll compare DGRO vs. IEF. We’ll look at fund composition and industry exposure, as well as at their portfolio growth and risk metrics. Moreover, I’ll also discuss DGRO’s and IEF’s holdings, performance, and annual returns and examine how these affect their overall returns.
|Name||iShares Core Dividend Growth ETF||iShares 7-10 Year Treasury Bond ETF|
|Category||Large Value||Long Government|
The iShares Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.
The iShares 7-10 Year Treasury Bond ETF (IEF) is a Long Government fund that is issued by iShares. It currently has 13.44B total assets under management and has yielded an average annual return of 5.06% over the past 10 years. The fund has a dividend yield of 0.84% with an expense ratio of 0.15%.
DGRO’s dividend yield is 1.20% higher than that of IEF (2.04% vs. 0.84%). Also, DGRO yielded on average 7.40% more per year over the past decade (12.46% vs. 5.06%). The expense ratio of DGRO is 0.07 percentage points lower than IEF’s (0.08% vs. 0.15%).
FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).
|Johnson & Johnson||2.87%|
|Procter & Gamble Co||2.79%|
|Verizon Communications Inc||2.68%|
|JPMorgan Chase & Co||2.57%|
|The Home Depot Inc||2.35%|
|Merck & Co Inc||2.11%|
|Cisco Systems Inc||1.98%|
DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.
Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.
|IEF Bond Sectors||Weight|
IEF’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
The iShares Core Dividend Growth ETF (DGRO) has a Alpha of 0 with a Mean Return of 0 and a Treynor Ratio of 0. Its R-squared is 0 while DGRO’s Standard Deviation is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Beta of 0.
The iShares 7-10 Year Treasury Bond ETF (IEF) has a Beta of 1.59 with a R-squared of 77.56 and a Treynor Ratio of 1.97. Its Alpha is -1.2 while IEF’s Standard Deviation is 5.42. Furthermore, the fund has a Sharpe Ratio of 0.6 and a Mean Return of 0.32.
DGRO’s Mean Return is 0.32 points lower than that of IEF and its R-squared is 77.56 points lower. With a Standard Deviation of 0, DGRO is slightly less volatile than IEF. The Alpha and Beta of DGRO are 1.20 points higher and 1.59 points lower than IEF’s Alpha and Beta.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
DGRO had its best year in 2019 with an annual return of 30.02%. DGRO’s worst year over the past decade yielded -2.24% and occurred in 2018. In most years the iShares Core Dividend Growth ETF provided moderate returns such as in 2012, 2011, and 2010 where annual returns amounted to 0.0%, 0.0%, and 0.0% respectively.
The year 2011 was the strongest year for IEF, returning 15.46% on an annual basis. The poorest year for IEF in the last ten years was 2013, with a yield of -6.12%. Most years the iShares 7-10 Year Treasury Bond ETF has given investors modest returns, such as in 2017, 2012, and 2019, when gains were 2.47%, 4.06%, and 8.38% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in DGRO would have resulted in a final balance of $19,580. This is a profit of $9,580 over 6 years and amounts to a compound annual growth rate (CAGR) of 12.46%.
With a $10,000 investment in IEF, the end total would have been $12,614. This equates to a $2,614 profit over 6 years and a compound annual growth rate (CAGR) of 5.06%.
DGRO’s CAGR is 7.40 percentage points higher than that of IEF and as a result, would have yielded $6,966 more on a $10,000 investment. Thus, DGRO outperformed IEF by 7.40% annually.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.