DIA vs. IEF: What’s The Difference?

The SPDR Dow Jones Industrial Average ETF Trust (DIA) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. DIA is a SPDR State Street Global Advisors Large Value fund and IEF is a iShares Long Government fund. So, what’s the difference between DIA and IEF? And which fund is better?

The expense ratio of DIA is 0.01 percentage points higher than IEF’s (0.16% vs. 0.15%). DIA also has a high exposure to the financial services sector while IEF is mostly comprised of AAA bonds. Overall, DIA has provided higher returns than IEF over the past ten years.

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

Summary

DIA IEF
Name SPDR Dow Jones Industrial Average ETF Trust iShares 7-10 Year Treasury Bond ETF
Category Large Value Long Government
Issuer SPDR State Street Global Advisors iShares
AUM 30.46B 13.44B
Avg. Return 13.35% 5.06%
Div. Yield 1.61% 0.84%
Expense Ratio 0.16% 0.15%

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 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%.

DIA’s dividend yield is 0.77% higher than that of IEF (1.61% vs. 0.84%). Also, DIA yielded on average 8.29% more per year over the past decade (13.35% vs. 5.06%). The expense ratio of DIA is 0.01 percentage points higher than IEF’s (0.16% vs. 0.15%).

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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%.

IEF - Holdings

IEF Bond Sectors Weight
AAA 100.0%
Others 0.0%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

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.

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Risk Analysis

DIA IEF
Mean Return 1.13 0.32
R-squared 93.31 77.56
Std. Deviation 13.68 5.42
Alpha -0.94 -1.2
Beta 0.97 1.59
Sharpe Ratio 0.94 0.6
Treynor Ratio 13.07 1.97

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

The iShares 7-10 Year Treasury Bond ETF (IEF) has a Standard Deviation of 5.42 with a Mean Return of 0.32 and a R-squared of 77.56. Its Alpha is -1.2 while IEF’s Beta is 1.59. Furthermore, the fund has a Treynor Ratio of 1.97 and a Sharpe Ratio of 0.6.

DIA’s Mean Return is 0.81 points higher than that of IEF and its R-squared is 15.75 points higher. With a Standard Deviation of 13.68, DIA is slightly more volatile than IEF. The Alpha and Beta of DIA are 0.26 points higher and 0.62 points lower than IEF’s Alpha and Beta.

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Performance

Annual Returns

DIA vs. IEF - Annual Returns

Year DIA IEF
2020 9.63% 9.84%
2019 25.09% 8.38%
2018 -3.6% 0.82%
2017 27.97% 2.47%
2016 16.28% 1.0%
2015 0.1% 1.55%
2014 9.88% 8.92%
2013 29.41% -6.12%
2012 10.04% 4.06%
2011 8.21% 15.46%
2010 13.87% 9.29%

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 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.

Portfolio Growth

DIA vs. IEF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
DIA $10,000 $37,965 13.35%
IEF $10,000 $16,936 5.06%

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 IEF, the end total would have been $16,936. This equates to a $6,936 profit over 11 years and a compound annual growth rate (CAGR) of 5.06%.

DIA’s CAGR is 8.29 percentage points higher than that of IEF and as a result, would have yielded $21,029 more on a $10,000 investment. Thus, DIA outperformed IEF by 8.29% annually.


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