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.
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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 | 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 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.
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
| 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
| 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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