DIA vs. HYG: What’s The Difference?

The SPDR Dow Jones Industrial Average ETF Trust (DIA) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) are both among the Top 100 ETFs. DIA is a SPDR State Street Global Advisors Large Value fund and HYG is a iShares High Yield Bond fund. So, what’s the difference between DIA and HYG? And which fund is better?

The expense ratio of DIA is 0.32 percentage points lower than HYG’s (0.16% vs. 0.48%). DIA also has a high exposure to the financial services sector while HYG is mostly comprised of BB bonds. Overall, DIA has provided higher returns than HYG over the past 11 years.

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

Summary

DIA HYG
Name SPDR Dow Jones Industrial Average ETF Trust iShares iBoxx $ High Yield Corporate Bond ETF
Category Large Value High Yield Bond
Issuer SPDR State Street Global Advisors iShares
AUM 30.46B 20.03B
Avg. Return 13.35% 6.42%
Div. Yield 1.61% 4.44%
Expense Ratio 0.16% 0.48%

The SPDR Dow Jones Industrial Average ETF Trust (DIA) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 30.46B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.61% with an expense ratio of 0.16%.

The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) is a High Yield Bond fund that is issued by iShares. It currently has 20.03B total assets under management and has yielded an average annual return of 6.42% over the past 10 years. The fund has a dividend yield of 4.44% with an expense ratio of 0.48%.

DIA’s dividend yield is 2.83% lower than that of HYG (1.61% vs. 4.44%). Also, DIA yielded on average 6.94% more per year over the past decade (13.35% vs. 6.42%). The expense ratio of DIA is 0.32 percentage points lower than HYG’s (0.16% vs. 0.48%).

Fund Composition

Holdings

DIA - Holdings

DIA Holdings Weight
UnitedHealth Group Inc 7.63%
Goldman Sachs Group Inc 7.23%
The Home Depot Inc 6.07%
Microsoft Corp 5.16%
Salesforce.com Inc 4.65%
Amgen Inc 4.64%
Boeing Co 4.56%
Visa Inc Class A 4.45%
McDonald’s Corp 4.4%
Honeywell International Inc 4.18%

DIA’s Top Holdings are UnitedHealth Group Inc, Goldman Sachs Group Inc, The Home Depot Inc, Microsoft Corp, and Salesforce.com Inc at 7.63%, 7.23%, 6.07%, 5.16%, and 4.65%.

Amgen Inc (4.64%), Boeing Co (4.56%), and Visa Inc Class A (4.45%) have a slightly smaller but still significant weight. McDonald’s Corp and Honeywell International Inc are also represented in the DIA’s holdings at 4.4% and 4.18%.

HYG - Holdings

HYG Bond Sectors Weight
BB 56.53%
B 31.27%
Below B 11.4%
BBB 0.61%
AAA 0.28%
A 0.0%
AA 0.0%
US Government 0.0%
Others -0.09%

HYG’s Top Bond Sectors are ratings of BB, B, Below B, BBB, and AAA at 56.53%, 31.27%, 11.4%, 0.61%, and 0.28%. The fund is less weighted towards A (0.0%), AA (0.0%), and US Government (0.0%) rated bonds.

Risk Analysis

DIA HYG
Mean Return 1.13 0.46
R-squared 93.31 4.1
Std. Deviation 13.68 6.96
Alpha -0.94 3.58
Beta 0.97 0.48
Sharpe Ratio 0.94 0.7
Treynor Ratio 13.07 10.01

The SPDR Dow Jones Industrial Average ETF Trust (DIA) has a Mean Return of 1.13 with a Sharpe Ratio of 0.94 and a R-squared of 93.31. Its Treynor Ratio is 13.07 while DIA’s Standard Deviation is 13.68. Furthermore, the fund has a Alpha of -0.94 and a Beta of 0.97.

The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) has a Alpha of 3.58 with a Sharpe Ratio of 0.7 and a Mean Return of 0.46. Its Treynor Ratio is 10.01 while HYG’s Beta is 0.48. Furthermore, the fund has a R-squared of 4.1 and a Standard Deviation of 6.96.

DIA’s Mean Return is 0.67 points higher than that of HYG and its R-squared is 89.21 points higher. With a Standard Deviation of 13.68, DIA is slightly more volatile than HYG. The Alpha and Beta of DIA are 4.52 points lower and 0.49 points higher than HYG’s Alpha and Beta.

Performance

Annual Returns

DIA vs. HYG - Annual Returns

Year DIA HYG
2020 9.63% 4.12%
2019 25.09% 14.23%
2018 -3.6% -1.93%
2017 27.97% 6.09%
2016 16.28% 13.92%
2015 0.1% -5.55%
2014 9.88% 2.0%
2013 29.41% 5.9%
2012 10.04% 13.83%
2011 8.21% 5.89%
2010 13.87% 12.07%

DIA had its best year in 2013 with an annual return of 29.41%. DIA’s worst year over the past decade yielded -3.6% and occurred in 2018. In most years the SPDR Dow Jones Industrial Average ETF Trust provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 9.88%, 10.04%, and 13.87% respectively.

The year 2019 was the strongest year for HYG, returning 14.23% on an annual basis. The poorest year for HYG in the last ten years was 2015, with a yield of -5.55%. Most years the iShares iBoxx $ High Yield Corporate Bond ETF has given investors modest returns, such as in 2011, 2013, and 2017, when gains were 5.89%, 5.9%, and 6.09% respectively.

Portfolio Growth

DIA vs. HYG - Portfolio Growth

Fund Initial Balance Final Balance CAGR
DIA $10,000 $37,965 13.35%
HYG $10,000 $19,427 6.42%

A $10,000 investment in DIA would have resulted in a final balance of $37,965. This is a profit of $27,965 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.35%.

With a $10,000 investment in HYG, the end total would have been $19,427. This equates to a $9,427 profit over 11 years and a compound annual growth rate (CAGR) of 6.42%.

DIA’s CAGR is 6.94 percentage points higher than that of HYG and as a result, would have yielded $18,538 more on a $10,000 investment. Thus, DIA outperformed HYG by 6.94% annually.


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