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DIA vs. SHY: What’s The Difference?

The SPDR Dow Jones Industrial Average ETF Trust (DIA) and the iShares 1-3 Year Treasury Bond ETF (SHY) are both among the Top 100 ETFs. DIA is a SPDR State Street Global Advisors Large Value fund and SHY is a iShares Short Government fund. So, what’s the difference between DIA and SHY? And which fund is better?

The expense ratio of DIA is 0.01 percentage points higher than SHY’s (0.16% vs. 0.15%). DIA also has a high exposure to the financial services sector while SHY is mostly comprised of AAA bonds. Overall, DIA has provided higher returns than SHY over the past 11 years.

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

Summary

DIASHY
NameSPDR Dow Jones Industrial Average ETF TrustiShares 1-3 Year Treasury Bond ETF
CategoryLarge ValueShort Government
IssuerSPDR State Street Global AdvisorsiShares
AUM30.46B19.51B
Avg. Return13.35%1.27%
Div. Yield1.61%0.46%
Expense Ratio0.16%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 1-3 Year Treasury Bond ETF (SHY) is a Short Government fund that is issued by iShares. It currently has 19.51B total assets under management and has yielded an average annual return of 1.27% over the past 10 years. The fund has a dividend yield of 0.46% with an expense ratio of 0.15%.

DIA’s dividend yield is 1.15% higher than that of SHY (1.61% vs. 0.46%). Also, DIA yielded on average 12.08% more per year over the past decade (13.35% vs. 1.27%). The expense ratio of DIA is 0.01 percentage points higher than SHY’s (0.16% vs. 0.15%).

Fund Composition

Holdings

DIA - Holdings

DIA HoldingsWeight
UnitedHealth Group Inc7.63%
Goldman Sachs Group Inc7.23%
The Home Depot Inc6.07%
Microsoft Corp5.16%
Salesforce.com Inc4.65%
Amgen Inc4.64%
Boeing Co4.56%
Visa Inc Class A4.45%
McDonald’s Corp4.4%
Honeywell International Inc4.18%

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%.

SHY - Holdings

SHY Bond SectorsWeight
AAA99.67%
Others0.33%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

SHY’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.67%, 0.33%, 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

DIASHY
Mean Return1.130.09
R-squared93.3139.11
Std. Deviation13.680.89
Alpha-0.94-0.03
Beta0.970.18
Sharpe Ratio0.940.54
Treynor Ratio13.072.6

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

The iShares 1-3 Year Treasury Bond ETF (SHY) has a Mean Return of 0.09 with a Sharpe Ratio of 0.54 and a Alpha of -0.03. Its Treynor Ratio is 2.6 while SHY’s Beta is 0.18. Furthermore, the fund has a Standard Deviation of 0.89 and a R-squared of 39.11.

DIA’s Mean Return is 1.04 points higher than that of SHY and its R-squared is 54.20 points higher. With a Standard Deviation of 13.68, DIA is slightly more volatile than SHY. The Alpha and Beta of DIA are 0.91 points lower and 0.79 points higher than SHY’s Alpha and Beta.

Performance

Annual Returns

DIA vs. SHY - Annual Returns

YearDIASHY
20209.63%3.01%
201925.09%3.42%
2018-3.6%1.45%
201727.97%0.27%
201616.28%0.75%
20150.1%0.43%
20149.88%0.48%
201329.41%0.23%
201210.04%0.31%
20118.21%1.43%
201013.87%2.23%

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 SHY, returning 3.42% on an annual basis. The poorest year for SHY in the last ten years was 2013, with a yield of 0.23%. Most years the iShares 1-3 Year Treasury Bond ETF has given investors modest returns, such as in 2014, 2016, and 2011, when gains were 0.48%, 0.75%, and 1.43% respectively.

Portfolio Growth

DIA vs. SHY - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
DIA$10,000$37,96513.35%
SHY$10,000$11,4861.27%

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 SHY, the end total would have been $11,486. This equates to a $1,486 profit over 11 years and a compound annual growth rate (CAGR) of 1.27%.

DIA’s CAGR is 12.08 percentage points higher than that of SHY and as a result, would have yielded $26,479 more on a $10,000 investment. Thus, DIA outperformed SHY by 12.08% annually.


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