The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. HYG is a iShares High Yield Bond fund and IUSB is a iShares N/A fund. So, what’s the difference between HYG and IUSB? And which fund is better?
The expense ratio of HYG is 0.42 percentage points higher than IUSB’s (0.48% vs. 0.06%). HYG is mostly comprised of BB bonds and IUSB has a high exposure to AAA bond. Overall, HYG has provided higher returns than IUSB over the past 6 years.
In this article, we’ll compare HYG vs. IUSB. We’ll look at portfolio growth and holdings, as well as at their fund composition and industry exposure. Moreover, I’ll also discuss HYG’s and IUSB’s performance, annual returns, and risk metrics and examine how these affect their overall returns.
Summary
| HYG | IUSB | |
| Name | iShares iBoxx $ High Yield Corporate Bond ETF | iShares Core Total USD Bond Market ETF |
| Category | High Yield Bond | N/A |
| Issuer | iShares | iShares |
| AUM | 20.03B | 14.49B |
| Avg. Return | 6.42% | 4.13% |
| Div. Yield | 4.44% | 2.1% |
| Expense Ratio | 0.48% | 0.06% |
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 Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.
HYG’s dividend yield is 2.34% higher than that of IUSB (4.44% vs. 2.1%). Also, HYG yielded on average 2.29% more per year over the past decade (6.42% vs. 4.13%). The expense ratio of HYG is 0.42 percentage points higher than IUSB’s (0.48% vs. 0.06%).
Fund Composition
Holdings
| HYG Bond Sectors | Weight |
| BB | 56.53% |
| B | 31.27% |
| Below B | 11.4% |
| BBB | 0.61% |
| AAA | 0.28% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
| Others | -0.09% |
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.
| IUSB Bond Sectors | Weight |
| AAA | 58.32% |
| BBB | 16.98% |
| A | 12.27% |
| BB | 4.33% |
| AA | 3.36% |
| B | 2.8% |
| Others | 1.01% |
| Below B | 0.92% |
| US Government | 0.0% |
IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.
Risk Analysis
| HYG | IUSB | |
| Mean Return | 0.46 | 0 |
| R-squared | 4.1 | 0 |
| Std. Deviation | 6.96 | 0 |
| Alpha | 3.58 | 0 |
| Beta | 0.48 | 0 |
| Sharpe Ratio | 0.7 | 0 |
| Treynor Ratio | 10.01 | 0 |
The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) has a Sharpe Ratio of 0.7 with a Beta of 0.48 and a R-squared of 4.1. Its Alpha is 3.58 while HYG’s Mean Return is 0.46. Furthermore, the fund has a Treynor Ratio of 10.01 and a Standard Deviation of 6.96.
The iShares Core Total USD Bond Market ETF (IUSB) has a Standard Deviation of 0 with a Mean Return of 0 and a Treynor Ratio of 0. Its R-squared is 0 while IUSB’s Beta is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Alpha of 0.
HYG’s Mean Return is 0.46 points higher than that of IUSB and its R-squared is 4.10 points higher. With a Standard Deviation of 6.96, HYG is slightly more volatile than IUSB. The Alpha and Beta of HYG are 3.58 points higher and 0.48 points higher than IUSB’s Alpha and Beta.
Performance
Annual Returns
| Year | HYG | IUSB |
| 2020 | 4.12% | 7.59% |
| 2019 | 14.23% | 9.26% |
| 2018 | -1.93% | -0.38% |
| 2017 | 6.09% | 4.06% |
| 2016 | 13.92% | 3.78% |
| 2015 | -5.55% | 0.46% |
| 2014 | 2.0% | 0.0% |
| 2013 | 5.9% | 0.0% |
| 2012 | 13.83% | 0.0% |
| 2011 | 5.89% | 0.0% |
| 2010 | 12.07% | 0.0% |
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 2019 was the strongest year for IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| HYG | $10,000 | $13,314 | 6.42% |
| IUSB | $10,000 | $12,704 | 4.13% |
A $10,000 investment in HYG would have resulted in a final balance of $13,314. This is a profit of $3,314 over 6 years and amounts to a compound annual growth rate (CAGR) of 6.42%.
With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.
HYG’s CAGR is 2.29 percentage points higher than that of IUSB and as a result, would have yielded $610 more on a $10,000 investment. Thus, HYG outperformed IUSB by 2.29% annually.
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