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HYG vs. IWP: What’s The Difference?

The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) and the iShares Russell Mid-Cap Growth ETF (IWP) are both among the Top 100 ETFs. HYG is a iShares High Yield Bond fund and IWP is a iShares Mid-Cap Growth fund. So, what’s the difference between HYG and IWP? And which fund is better?

The expense ratio of HYG is 0.24 percentage points higher than IWP’s (0.48% vs. 0.24%). HYG is mostly comprised of BB bonds while IWP has a high exposure to the technology sector. Overall, HYG has provided lower returns than IWP over the past 11 years.

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

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Summary

HYGIWP
NameiShares iBoxx $ High Yield Corporate Bond ETFiShares Russell Mid-Cap Growth ETF
CategoryHigh Yield BondMid-Cap Growth
IssueriSharesiShares
AUM20.03B15.7B
Avg. Return6.42%16.75%
Div. Yield4.44%0.26%
Expense Ratio0.48%0.24%

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 Russell Mid-Cap Growth ETF (IWP) is a Mid-Cap Growth fund that is issued by iShares. It currently has 15.7B total assets under management and has yielded an average annual return of 16.75% over the past 10 years. The fund has a dividend yield of 0.26% with an expense ratio of 0.24%.

HYG’s dividend yield is 4.18% higher than that of IWP (4.44% vs. 0.26%). Also, HYG yielded on average 10.33% less per year over the past decade (6.42% vs. 16.75%). The expense ratio of HYG is 0.24 percentage points higher than IWP’s (0.48% vs. 0.24%).

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Fund Composition

Holdings

HYG - Holdings

HYG Bond SectorsWeight
BB56.53%
B31.27%
Below B11.4%
BBB0.61%
AAA0.28%
A0.0%
AA0.0%
US Government0.0%
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.

IWP - Holdings

IWP HoldingsWeight
IDEXX Laboratories Inc1.3%
DocuSign Inc1.3%
Roku Inc Class A1.29%
Match Group Inc1.06%
Chipotle Mexican Grill Inc1.06%
Pinterest Inc1.05%
Veeva Systems Inc Class A1.04%
Palantir Technologies Inc Ordinary Shares – Class A1.04%
Lululemon Athletica Inc1.01%
DexCom Inc1.0%

IWP’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Roku Inc Class A, Match Group Inc, and Chipotle Mexican Grill Inc at 1.3%, 1.3%, 1.29%, 1.06%, and 1.06%.

Pinterest Inc (1.05%), Veeva Systems Inc Class A (1.04%), and Palantir Technologies Inc Ordinary Shares – Class A (1.04%) have a slightly smaller but still significant weight. Lululemon Athletica Inc and DexCom Inc are also represented in the IWP’s holdings at 1.01% and 1.0%.

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Risk Analysis

HYGIWP
Mean Return0.461.27
R-squared4.187.01
Std. Deviation6.9616.05
Alpha3.58-1.03
Beta0.481.1
Sharpe Ratio0.70.91
Treynor Ratio10.0112.98

The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) has a R-squared of 4.1 with a Treynor Ratio of 10.01 and a Standard Deviation of 6.96. Its Mean Return is 0.46 while HYG’s Sharpe Ratio is 0.7. Furthermore, the fund has a Alpha of 3.58 and a Beta of 0.48.

The iShares Russell Mid-Cap Growth ETF (IWP) has a Treynor Ratio of 12.98 with a Alpha of -1.03 and a Sharpe Ratio of 0.91. Its R-squared is 87.01 while IWP’s Beta is 1.1. Furthermore, the fund has a Standard Deviation of 16.05 and a Mean Return of 1.27.

HYG’s Mean Return is 0.81 points lower than that of IWP and its R-squared is 82.91 points lower. With a Standard Deviation of 6.96, HYG is slightly less volatile than IWP. The Alpha and Beta of HYG are 4.61 points higher and 0.62 points lower than IWP’s Alpha and Beta.

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Performance

Annual Returns

HYG vs. IWP - Annual Returns

YearHYGIWP
20204.12%35.29%
201914.23%35.14%
2018-1.93%-4.95%
20176.09%24.98%
201613.92%7.15%
2015-5.55%-0.39%
20142.0%11.68%
20135.9%35.44%
201213.83%15.62%
20115.89%-1.82%
201012.07%26.1%

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 IWP, returning 35.44% on an annual basis. The poorest year for IWP in the last ten years was 2018, with a yield of -4.95%. Most years the iShares Russell Mid-Cap Growth ETF has given investors modest returns, such as in 2014, 2012, and 2017, when gains were 11.68%, 15.62%, and 24.98% respectively.

Portfolio Growth

HYG vs. IWP - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
HYG$10,000$19,4276.42%
IWP$10,000$50,19116.75%

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 IWP, the end total would have been $50,191. This equates to a $40,191 profit over 11 years and a compound annual growth rate (CAGR) of 16.75%.

HYG’s CAGR is 10.33 percentage points lower than that of IWP and as a result, would have yielded $30,764 less on a $10,000 investment. Thus, HYG performed worse than IWP by 10.33% annually.


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