The SPDR Dow Jones Industrial Average ETF Trust (DIA) and the iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) are both among the Top 100 ETFs. DIA is a SPDR State Street Global Advisors Large Value fund and IGSB is a iShares Short-Term Bond fund. So, what’s the difference between DIA and IGSB? And which fund is better?
The expense ratio of DIA is 0.10 percentage points higher than IGSB’s (0.16% vs. 0.06%). DIA also has a high exposure to the financial services sector while IGSB is mostly comprised of BBB bonds. Overall, DIA has provided higher returns than IGSB over the past 11 years.
In this article, we’ll compare DIA vs. IGSB. We’ll look at performance and fund composition, as well as at their portfolio growth and holdings. Moreover, I’ll also discuss DIA’s and IGSB’s risk metrics, industry exposure, and annual returns and examine how these affect their overall returns.
|Name||SPDR Dow Jones Industrial Average ETF Trust||iShares 1-5 Year Investment Grade Corporate Bond ETF|
|Category||Large Value||Short-Term Bond|
|Issuer||SPDR State Street Global Advisors||iShares|
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 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.
DIA’s dividend yield is 0.41% lower than that of IGSB (1.61% vs. 2.02%). Also, DIA yielded on average 10.85% more per year over the past decade (13.35% vs. 2.51%). The expense ratio of DIA is 0.10 percentage points higher than IGSB’s (0.16% vs. 0.06%).
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|UnitedHealth Group Inc||7.63%|
|Goldman Sachs Group Inc||7.23%|
|The Home Depot Inc||6.07%|
|Visa Inc Class A||4.45%|
|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%.
|IGSB Bond Sectors||Weight|
IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.
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The SPDR Dow Jones Industrial Average ETF Trust (DIA) has a R-squared of 93.31 with a Standard Deviation of 13.68 and a Treynor Ratio of 13.07. Its Alpha is -0.94 while DIA’s Sharpe Ratio is 0.94. Furthermore, the fund has a Beta of 0.97 and a Mean Return of 1.13.
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Mean Return of 0.19 with a Beta of 0.34 and a R-squared of 26.13. Its Standard Deviation is 2 while IGSB’s Treynor Ratio is 4.82. Furthermore, the fund has a Sharpe Ratio of 0.82 and a Alpha of 0.69.
DIA’s Mean Return is 0.94 points higher than that of IGSB and its R-squared is 67.18 points higher. With a Standard Deviation of 13.68, DIA is slightly more volatile than IGSB. The Alpha and Beta of DIA are 1.63 points lower and 0.63 points higher than IGSB’s Alpha and Beta.
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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 IGSB, returning 7.01% on an annual basis. The poorest year for IGSB in the last ten years was 2015, with a yield of 0.7%. Most years the iShares 1-5 Year Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2011, 2017, and 2016, when gains were 1.34%, 1.41%, and 1.77% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 IGSB, the end total would have been $13,103. This equates to a $3,103 profit over 11 years and a compound annual growth rate (CAGR) of 2.51%.
DIA’s CAGR is 10.85 percentage points higher than that of IGSB and as a result, would have yielded $24,862 more on a $10,000 investment. Thus, DIA outperformed IGSB by 10.85% annually.
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