The SPDR Dow Jones Industrial Average ETF Trust (DIA) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. DIA is a SPDR State Street Global Advisors Large Value fund and TLT is a iShares Long Government fund. So, what’s the difference between DIA and TLT? And which fund is better?
The expense ratio of DIA is 0.01 percentage points higher than TLT’s (0.16% vs. 0.15%). DIA also has a high exposure to the financial services sector while TLT is mostly comprised of AAA bonds. Overall, DIA has provided higher returns than TLT over the past ten years.
In this article, we’ll compare DIA vs. TLT. We’ll look at portfolio growth and fund composition, as well as at their industry exposure and holdings. Moreover, I’ll also discuss DIA’s and TLT’s annual returns, performance, and risk metrics and examine how these affect their overall returns.
Summary
| DIA | TLT | |
| Name | SPDR Dow Jones Industrial Average ETF Trust | iShares 20+ Year Treasury Bond ETF |
| Category | Large Value | Long Government |
| Issuer | SPDR State Street Global Advisors | iShares |
| AUM | 30.46B | 15.15B |
| Avg. Return | 13.35% | 9.00% |
| Div. Yield | 1.61% | 1.5% |
| 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 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.
DIA’s dividend yield is 0.11% higher than that of TLT (1.61% vs. 1.5%). Also, DIA yielded on average 4.36% more per year over the past decade (13.35% vs. 9.00%). The expense ratio of DIA is 0.01 percentage points higher than TLT’s (0.16% vs. 0.15%).
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%.
| TLT 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% |
TLT’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 | TLT | |
| Mean Return | 1.13 | 0.63 |
| R-squared | 93.31 | 68.76 |
| Std. Deviation | 13.68 | 12.76 |
| Alpha | -0.94 | -2.83 |
| Beta | 0.97 | 3.54 |
| Sharpe Ratio | 0.94 | 0.55 |
| Treynor Ratio | 13.07 | 1.82 |
The SPDR Dow Jones Industrial Average ETF Trust (DIA) has a Standard Deviation of 13.68 with a R-squared of 93.31 and a Beta of 0.97. Its Mean Return is 1.13 while DIA’s Alpha is -0.94. Furthermore, the fund has a Sharpe Ratio of 0.94 and a Treynor Ratio of 13.07.
The iShares 20+ Year Treasury Bond ETF (TLT) has a Treynor Ratio of 1.82 with a Mean Return of 0.63 and a R-squared of 68.76. Its Beta is 3.54 while TLT’s Alpha is -2.83. Furthermore, the fund has a Sharpe Ratio of 0.55 and a Standard Deviation of 12.76.
DIA’s Mean Return is 0.50 points higher than that of TLT and its R-squared is 24.55 points higher. With a Standard Deviation of 13.68, DIA is slightly more volatile than TLT. The Alpha and Beta of DIA are 1.89 points higher and 2.57 points lower than TLT’s Alpha and Beta.
Performance
Annual Returns
| Year | DIA | TLT |
| 2020 | 9.63% | 17.92% |
| 2019 | 25.09% | 14.93% |
| 2018 | -3.6% | -2.07% |
| 2017 | 27.97% | 8.92% |
| 2016 | 16.28% | 1.36% |
| 2015 | 0.1% | -1.65% |
| 2014 | 9.88% | 27.35% |
| 2013 | 29.41% | -13.91% |
| 2012 | 10.04% | 3.25% |
| 2011 | 8.21% | 33.6% |
| 2010 | 13.87% | 9.25% |
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 TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| DIA | $10,000 | $37,965 | 13.35% |
| TLT | $10,000 | $23,809 | 9.00% |
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 TLT, the end total would have been $23,809. This equates to a $13,809 profit over 11 years and a compound annual growth rate (CAGR) of 9.00%.
DIA’s CAGR is 4.36 percentage points higher than that of TLT and as a result, would have yielded $14,156 more on a $10,000 investment. Thus, DIA outperformed TLT by 4.36% annually.
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