The iShares U.S. Treasury Bond ETF (GOVT) and the iShares Russell Mid-Cap Value ETF (IWS) are both among the Top 100 ETFs. GOVT is a iShares Intermediate Government fund and IWS is a iShares Mid-Cap Value fund. So, what’s the difference between GOVT and IWS? And which fund is better?
The expense ratio of GOVT is 0.18 percentage points lower than IWS’s (0.05% vs. 0.23%). GOVT is mostly comprised of AAA bonds while IWS has a high exposure to the financial services sector. Overall, GOVT has provided lower returns than IWS over the past 8 years.
In this article, we’ll compare GOVT vs. IWS. We’ll look at risk metrics and annual returns, as well as at their industry exposure and portfolio growth. Moreover, I’ll also discuss GOVT’s and IWS’s performance, fund composition, and holdings and examine how these affect their overall returns.
|Name||iShares U.S. Treasury Bond ETF||iShares Russell Mid-Cap Value ETF|
|Category||Intermediate Government||Mid-Cap Value|
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 iShares Russell Mid-Cap Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.
GOVT’s dividend yield is 0.34% lower than that of IWS (1.0% vs. 1.34%). Also, GOVT yielded on average 9.67% less per year over the past decade (2.67% vs. 12.35%). The expense ratio of GOVT is 0.18 percentage points lower than IWS’s (0.05% vs. 0.23%).
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|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.
|Marvell Technology Inc||0.69%|
|IHS Markit Ltd||0.62%|
|Prudential Financial Inc||0.56%|
|Otis Worldwide Corp Ordinary Shares||0.54%|
|International Flavors & Fragrances Inc||0.53%|
|Xcel Energy Inc||0.52%|
|Motorola Solutions Inc||0.52%|
IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.
International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.
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The iShares U.S. Treasury Bond ETF (GOVT) has a Beta of 0 with a R-squared of 0 and a Mean Return of 0. Its Sharpe Ratio is 0 while GOVT’s Alpha is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Standard Deviation of 0.
The iShares Russell Mid-Cap Value ETF (IWS) has a Mean Return of 1.06 with a Beta of 1.1 and a R-squared of 87.04. Its Standard Deviation is 16.03 while IWS’s Alpha is -4.11. Furthermore, the fund has a Sharpe Ratio of 0.75 and a Treynor Ratio of 10.3.
GOVT’s Mean Return is 1.06 points lower than that of IWS and its R-squared is 87.04 points lower. With a Standard Deviation of 0, GOVT is slightly less volatile than IWS. The Alpha and Beta of GOVT are 4.11 points higher and 1.10 points lower than IWS’s Alpha and Beta.
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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 2013 was the strongest year for IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% 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 IWS, the end total would have been $22,829. This equates to a $12,829 profit over 8 years and a compound annual growth rate (CAGR) of 12.35%.
GOVT’s CAGR is 9.67 percentage points lower than that of IWS and as a result, would have yielded $10,532 less on a $10,000 investment. Thus, GOVT performed worse than IWS by 9.67% annually.
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