The iShares U.S. Treasury Bond ETF (GOVT) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. GOVT is a iShares Intermediate Government fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between GOVT and BIV? And which fund is better?
GOVT and BIV have the same expense ratio: 0.05%. GOVT is mostly comprised of AAA bonds and BIV has a high exposure to AAA bond. Overall, GOVT has provided lower returns than BIV over the past 8 years.
In this article, we’ll compare GOVT vs. BIV. We’ll look at annual returns and holdings, as well as at their performance and fund composition. Moreover, I’ll also discuss GOVT’s and BIV’s risk metrics, industry exposure, and portfolio growth and examine how these affect their overall returns.
|Name||iShares U.S. Treasury Bond ETF||Vanguard Intermediate-Term Bond Index Fund ETF Shares|
|Category||Intermediate Government||Intermediate-Term Bond|
The iShares U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.
GOVT’s dividend yield is 1.06% lower than that of BIV (1.0% vs. 2.06%). Also, GOVT yielded on average 2.64% less per year over the past decade (2.67% vs. 5.31%). GOVT and BIV have the same expense ratio: 0.05%.
FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).
|GOVT Bond Sectors||Weight|
GOVT’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.
|BIV Bond Sectors||Weight|
BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
The iShares U.S. Treasury Bond ETF (GOVT) has a Standard Deviation of 0 with a Treynor Ratio of 0 and a R-squared of 0. Its Sharpe Ratio is 0 while GOVT’s Beta is 0. Furthermore, the fund has a Alpha of 0 and a Mean Return of 0.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Sharpe Ratio of 0.89 with a Alpha of -0.07 and a Mean Return of 0.35. Its R-squared is 95.12 while BIV’s Beta is 1.33. Furthermore, the fund has a Treynor Ratio of 2.72 and a Standard Deviation of 4.09.
GOVT’s Mean Return is 0.35 points lower than that of BIV and its R-squared is 95.12 points lower. With a Standard Deviation of 0, GOVT is slightly less volatile than BIV. The Alpha and Beta of GOVT are 0.07 points higher and 1.33 points lower than BIV’s Alpha and Beta.
BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Coinbase - the simplest and cheapest broker I've found! Click here to read more (link to Coinbase).
GOVT had its best year in 2020 with an annual return of 7.92%. GOVT’s worst year over the past decade yielded -2.84% and occurred in 2013. In most years the iShares U.S. Treasury Bond ETF provided moderate returns such as in 2018, 2015, and 2016 where annual returns amounted to 0.74%, 0.76%, and 0.92% respectively.
The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in GOVT would have resulted in a final balance of $12,297. This is a profit of $2,297 over 8 years and amounts to a compound annual growth rate (CAGR) of 2.67%.
With a $10,000 investment in BIV, the end total would have been $13,487. This equates to a $3,487 profit over 8 years and a compound annual growth rate (CAGR) of 5.31%.
GOVT’s CAGR is 2.64 percentage points lower than that of BIV and as a result, would have yielded $1,190 less on a $10,000 investment. Thus, GOVT performed worse than BIV by 2.64% annually.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
3) If you are interested in crypto, check out Coinbase. I've started allocating a small amount of assets to the growing crypto space and Coinbase has just been a breeze to use. Once you register, make sure to also open an Coinbase Pro account to buy crypto at the lowest fees on the market (just 0.1%!).
To see all of my most up-to-date recommendations, check out the Recommended Tools section.