IAU vs. GOVT: What’s The Difference?

The iShares Gold Trust (IAU) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. IAU is a iShares N/A fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between IAU and GOVT? And which fund is better?

The expense ratio of IAU is 0.20 percentage points higher than GOVT’s (0.25% vs. 0.05%). IAU also has a high exposure to the technology sector while GOVT is mostly comprised of AAA bonds. Overall, IAU has provided higher returns than GOVT over the past 8 years.

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

Summary

IAU GOVT
Name iShares Gold Trust iShares U.S. Treasury Bond ETF
Category N/A Intermediate Government
Issuer iShares iShares
AUM 28.61B 17.07B
Avg. Return 6.03% 2.67%
Div. Yield 0.0% 1.0%
Expense Ratio 0.25% 0.05%

The iShares Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.

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%.

IAU’s dividend yield is 1.00% lower than that of GOVT (0.0% vs. 1.0%). Also, IAU yielded on average 3.36% more per year over the past decade (6.03% vs. 2.67%). The expense ratio of IAU is 0.20 percentage points higher than GOVT’s (0.25% vs. 0.05%).

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Fund Composition

Holdings

IAU - Holdings

IAU Holdings Weight
Gold 100.0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%

IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.

N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.

GOVT - Holdings

GOVT Bond Sectors Weight
AAA 100.0%
Others 0.0%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

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.

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Risk Analysis

IAU GOVT
Mean Return 0.23 0
R-squared 16.03 0
Std. Deviation 16.97 0
Alpha 4.16 0
Beta 0.48 0
Sharpe Ratio 0.13 0
Treynor Ratio 1.5 0

The iShares Gold Trust (IAU) has a Standard Deviation of 16.97 with a R-squared of 16.03 and a Treynor Ratio of 1.5. Its Alpha is 4.16 while IAU’s Beta is 0.48. Furthermore, the fund has a Mean Return of 0.23 and a Sharpe Ratio of 0.13.

The iShares U.S. Treasury Bond ETF (GOVT) has a Mean Return of 0 with a Standard Deviation of 0 and a R-squared of 0. Its Beta is 0 while GOVT’s Treynor Ratio is 0. Furthermore, the fund has a Alpha of 0 and a Sharpe Ratio of 0.

IAU’s Mean Return is 0.23 points higher than that of GOVT and its R-squared is 16.03 points higher. With a Standard Deviation of 16.97, IAU is slightly more volatile than GOVT. The Alpha and Beta of IAU are 4.16 points higher and 0.48 points higher than GOVT’s Alpha and Beta.

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Performance

Annual Returns

IAU vs. GOVT - Annual Returns

Year IAU GOVT
2020 23.86% 7.92%
2019 18.54% 6.71%
2018 -1.39% 0.74%
2017 11.58% 2.19%
2016 8.85% 0.92%
2015 -11.65% 0.76%
2014 -0.44% 4.99%
2013 -27.96% -2.84%
2012 8.37% 0.0%
2011 8.66% 0.0%
2010 27.93% 0.0%

IAU had its best year in 2010 with an annual return of 27.93%. IAU’s worst year over the past decade yielded -27.96% and occurred in 2013. In most years the iShares Gold Trust provided moderate returns such as in 2012, 2011, and 2016 where annual returns amounted to 8.37%, 8.66%, and 8.85% respectively.

The year 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.

Portfolio Growth

IAU vs. GOVT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IAU $10,000 $11,142 6.03%
GOVT $10,000 $12,297 2.67%

A $10,000 investment in IAU would have resulted in a final balance of $11,142. This is a profit of $1,142 over 8 years and amounts to a compound annual growth rate (CAGR) of 6.03%.

With a $10,000 investment in GOVT, the end total would have been $12,297. This equates to a $2,297 profit over 8 years and a compound annual growth rate (CAGR) of 2.67%.

IAU’s CAGR is 3.36 percentage points higher than that of GOVT and as a result, would have yielded $1,155 less on a $10,000 investment. Thus, IAU outperformed GOVT by 3.36% annually.


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