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GLD vs. SHY: What’s The Difference?

The SPDR Gold Shares (GLD) and the iShares 1-3 Year Treasury Bond ETF (SHY) are both among the Top 100 ETFs. GLD is a SPDR State Street Global Advisors N/A fund and SHY is a iShares Short Government fund. So, what’s the difference between GLD and SHY? And which fund is better?

The expense ratio of GLD is 0.25 percentage points higher than SHY’s (0.4% vs. 0.15%). GLD also has a high exposure to the technology sector while SHY is mostly comprised of AAA bonds. Overall, GLD has provided higher returns than SHY over the past ten years.

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

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Summary

GLDSHY
NameSPDR Gold SharesiShares 1-3 Year Treasury Bond ETF
CategoryN/AShort Government
IssuerSPDR State Street Global AdvisorsiShares
AUM59.26B19.51B
Avg. Return5.81%1.27%
Div. Yield0.0%0.46%
Expense Ratio0.4%0.15%

The SPDR Gold Shares (GLD) is a N/A fund that is issued by SPDR State Street Global Advisors. It currently has 59.26B total assets under management and has yielded an average annual return of 5.81% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.4%.

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%.

GLD’s dividend yield is 0.46% lower than that of SHY (0.0% vs. 0.46%). Also, GLD yielded on average 4.53% more per year over the past decade (5.81% vs. 1.27%). The expense ratio of GLD is 0.25 percentage points higher than SHY’s (0.4% vs. 0.15%).

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Fund Composition

Holdings

GLD - Holdings

GLD HoldingsWeight
Gold Trust100.0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%

GLD’s Top Holdings are Gold Trust, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.

N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the GLD’s holdings at 0% and 0%.

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.

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Risk Analysis

GLDSHY
Mean Return0.210.09
R-squared16.2139.11
Std. Deviation16.580.89
Alpha3.91-0.03
Beta0.480.18
Sharpe Ratio0.120.54
Treynor Ratio1.212.6

The SPDR Gold Shares (GLD) has a Mean Return of 0.21 with a Beta of 0.48 and a Sharpe Ratio of 0.12. Its Standard Deviation is 16.58 while GLD’s Alpha is 3.91. Furthermore, the fund has a R-squared of 16.21 and a Treynor Ratio of 1.21.

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

GLD’s Mean Return is 0.12 points higher than that of SHY and its R-squared is 22.90 points lower. With a Standard Deviation of 16.58, GLD is slightly more volatile than SHY. The Alpha and Beta of GLD are 3.94 points higher and 0.30 points higher than SHY’s Alpha and Beta.

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Performance

Annual Returns

GLD vs. SHY - Annual Returns

YearGLDSHY
202023.68%3.01%
201918.36%3.42%
2018-1.54%1.45%
201711.41%0.27%
20168.69%0.75%
2015-11.78%0.43%
2014-0.58%0.48%
2013-28.09%0.23%
20125.26%0.31%
201111.2%1.43%
201027.25%2.23%

GLD had its best year in 2010 with an annual return of 27.25%. GLD’s worst year over the past decade yielded -28.09% and occurred in 2013. In most years the SPDR Gold Shares provided moderate returns such as in 2012, 2016, and 2011 where annual returns amounted to 5.26%, 8.69%, and 11.2% 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

GLD vs. SHY - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
GLD$10,000$16,3955.81%
SHY$10,000$11,4861.27%

A $10,000 investment in GLD would have resulted in a final balance of $16,395. This is a profit of $6,395 over 11 years and amounts to a compound annual growth rate (CAGR) of 5.81%.

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%.

GLD’s CAGR is 4.53 percentage points higher than that of SHY and as a result, would have yielded $4,909 more on a $10,000 investment. Thus, GLD outperformed SHY by 4.53% annually.


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