The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) and the iShares MSCI EAFE Value ETF (EFV) are both among the Top 100 ETFs. HYG is a iShares High Yield Bond fund and EFV is a iShares Foreign Large Value fund. So, what’s the difference between HYG and EFV? And which fund is better?
The expense ratio of HYG is 0.09 percentage points higher than EFV’s (0.48% vs. 0.39%). HYG is mostly comprised of BB bonds while EFV has a high exposure to the financial services sector. Overall, HYG has provided higher returns than EFV over the past 11 years.
In this article, we’ll compare HYG vs. EFV. We’ll look at annual returns and fund composition, as well as at their industry exposure and holdings. Moreover, I’ll also discuss HYG’s and EFV’s performance, risk metrics, and portfolio growth and examine how these affect their overall returns.
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|Name||iShares iBoxx $ High Yield Corporate Bond ETF||iShares MSCI EAFE Value ETF|
|Category||High Yield Bond||Foreign Large Value|
The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) is a High Yield Bond fund that is issued by iShares. It currently has 20.03B total assets under management and has yielded an average annual return of 6.42% over the past 10 years. The fund has a dividend yield of 4.44% with an expense ratio of 0.48%.
The iShares MSCI EAFE Value ETF (EFV) is a Foreign Large Value fund that is issued by iShares. It currently has 14.37B total assets under management and has yielded an average annual return of 3.99% over the past 10 years. The fund has a dividend yield of 2.94% with an expense ratio of 0.39%.
HYG’s dividend yield is 1.50% higher than that of EFV (4.44% vs. 2.94%). Also, HYG yielded on average 2.42% more per year over the past decade (6.42% vs. 3.99%). The expense ratio of HYG is 0.09 percentage points higher than EFV’s (0.48% vs. 0.39%).
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|HYG Bond Sectors||Weight|
HYG’s Top Bond Sectors are ratings of BB, B, Below B, BBB, and AAA at 56.53%, 31.27%, 11.4%, 0.61%, and 0.28%. The fund is less weighted towards A (0.0%), AA (0.0%), and US Government (0.0%) rated bonds.
|Toyota Motor Corp||2.21%|
|Commonwealth Bank of Australia||1.59%|
|HSBC Holdings PLC||1.4%|
|Rio Tinto PLC||1.1%|
EFV’s Top Holdings are Novartis AG, Toyota Motor Corp, Commonwealth Bank of Australia, Siemens AG, and Sanofi SA at 2.41%, 2.21%, 1.59%, 1.45%, and 1.42%.
HSBC Holdings PLC (1.4%), TotalEnergies SE (1.35%), and Allianz SE (1.23%) have a slightly smaller but still significant weight. GlaxoSmithKline PLC and Rio Tinto PLC are also represented in the EFV’s holdings at 1.18% and 1.1%.
The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) has a Standard Deviation of 6.96 with a Beta of 0.48 and a Sharpe Ratio of 0.7. Its R-squared is 4.1 while HYG’s Treynor Ratio is 10.01. Furthermore, the fund has a Alpha of 3.58 and a Mean Return of 0.46.
The iShares MSCI EAFE Value ETF (EFV) has a Treynor Ratio of 2.92 with a Mean Return of 0.42 and a R-squared of 92.15. Its Alpha is -1.77 while EFV’s Standard Deviation is 16.53. Furthermore, the fund has a Sharpe Ratio of 0.26 and a Beta of 1.05.
HYG’s Mean Return is 0.04 points higher than that of EFV and its R-squared is 88.05 points lower. With a Standard Deviation of 6.96, HYG is slightly less volatile than EFV. The Alpha and Beta of HYG are 5.35 points higher and 0.57 points lower than EFV’s Alpha and Beta.
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HYG had its best year in 2019 with an annual return of 14.23%. HYG’s worst year over the past decade yielded -5.55% and occurred in 2015. In most years the iShares iBoxx $ High Yield Corporate Bond ETF provided moderate returns such as in 2011, 2013, and 2017 where annual returns amounted to 5.89%, 5.9%, and 6.09% respectively.
The year 2013 was the strongest year for EFV, returning 22.61% on an annual basis. The poorest year for EFV in the last ten years was 2018, with a yield of -14.88%. Most years the iShares MSCI EAFE Value ETF has given investors modest returns, such as in 2020, 2010, and 2016, when gains were -2.78%, 3.18%, and 4.87% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in HYG would have resulted in a final balance of $19,427. This is a profit of $9,427 over 11 years and amounts to a compound annual growth rate (CAGR) of 6.42%.
With a $10,000 investment in EFV, the end total would have been $14,134. This equates to a $4,134 profit over 11 years and a compound annual growth rate (CAGR) of 3.99%.
HYG’s CAGR is 2.42 percentage points higher than that of EFV and as a result, would have yielded $5,293 more on a $10,000 investment. Thus, HYG outperformed EFV by 2.42% annually.
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