The iShares Gold Trust (IAU) and the iShares Preferred and Income Securities ETF (PFF) are both among the Top 100 ETFs. IAU is a iShares N/A fund and PFF is a iShares Preferred Stock fund. So, what’s the difference between IAU and PFF? And which fund is better?
The expense ratio of IAU is 0.21 percentage points lower than PFF’s (0.25% vs. 0.46%). IAU also has a lower exposure to the technology sector and a higher standard deviation. Overall, IAU has provided lower returns than PFF over the past 11 years.
In this article, we’ll compare IAU vs. PFF. We’ll look at annual returns and portfolio growth, as well as at their performance and industry exposure. Moreover, I’ll also discuss IAU’s and PFF’s holdings, fund composition, and risk metrics and examine how these affect their overall returns.
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Summary
| IAU | PFF | |
| Name | iShares Gold Trust | iShares Preferred and Income Securities ETF |
| Category | N/A | Preferred Stock |
| Issuer | iShares | iShares |
| AUM | 28.61B | 19.8B |
| Avg. Return | 6.03% | 6.90% |
| Div. Yield | 0.0% | 4.47% |
| Expense Ratio | 0.25% | 0.46% |
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 Preferred and Income Securities ETF (PFF) is a Preferred Stock fund that is issued by iShares. It currently has 19.8B total assets under management and has yielded an average annual return of 6.90% over the past 10 years. The fund has a dividend yield of 4.47% with an expense ratio of 0.46%.
IAU’s dividend yield is 4.47% lower than that of PFF (0.0% vs. 4.47%). Also, IAU yielded on average 0.87% less per year over the past decade (6.03% vs. 6.90%). The expense ratio of IAU is 0.21 percentage points lower than PFF’s (0.25% vs. 0.46%).
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Fund Composition
Industry Exposure
| IAU | PFF | |
| Technology | 0.0% | 0.0% |
| Industrials | 0.0% | 10.27% |
| Energy | 0.0% | 0.0% |
| Communication Services | 0.0% | 0.0% |
| Utilities | 0.0% | 81.81% |
| Healthcare | 0.0% | 3.54% |
| Consumer Defensive | 0.0% | 0.0% |
| Real Estate | 0.0% | 0.65% |
| Financial Services | 0.0% | 0.0% |
| Consumer Cyclical | 0.0% | 0.0% |
| Basic Materials | 0.0% | 3.74% |
The iShares Gold Trust (IAU) has the most exposure to the Technology sector at 0.0%. This is followed by Industrials and Energy at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.
IAU’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Energy stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
The iShares Preferred and Income Securities ETF (PFF) has the most exposure to the Utilities sector at 81.81%. This is followed by Industrials and Basic Materials at 10.27% and 3.74% respectively. Financial Services (0.0%), Consumer Defensive (0.0%), and Communication Services (0.0%) only make up 0.00% of the fund’s total assets.
PFF’s mid-section with moderate exposure is comprised of Energy, Technology, Real Estate, Healthcare, and Basic Materials stocks at 0.0%, 0.0%, 0.65%, 3.54%, and 3.74%.
IAU is 0.00% less exposed to the Technology sector than PFF (0.0% vs 0.0%). IAU’s exposure to Industrials and Energy stocks is 10.27% lower and 0.00% lower respectively (0.0% vs. 10.27% and 0.0% vs. 0.0%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 0.65% less of the fund’s holdings compared to PFF (0.00% vs. 0.65%).
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%.
| PFF Holdings | Weight |
| Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A | 2.54% |
| BlackRock Cash Funds Treasury SL Agency | 2.3% |
| Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L- | 1.79% |
| Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L- | 1.49% |
| ArcelorMittal S.A. 5.5% | 1.36% |
| Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A | 1.35% |
| Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B | 1.14% |
| NextEra Energy Inc Unit | 1.12% |
| Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 | 1.08% |
| Avantor Inc Ser A | 0.99% |
PFF’s Top Holdings are Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A, BlackRock Cash Funds Treasury SL Agency, Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-, Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-, and ArcelorMittal S.A. 5.5% at 2.54%, 2.3%, 1.79%, 1.49%, and 1.36%.
Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A (1.35%), Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B (1.14%), and NextEra Energy Inc Unit (1.12%) have a slightly smaller but still significant weight. Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 and Avantor Inc Ser A are also represented in the PFF’s holdings at 1.08% and 0.99%.
Risk Analysis
| IAU | PFF | |
| Mean Return | 0.23 | 0.52 |
| R-squared | 16.03 | 9.39 |
| Std. Deviation | 16.97 | 7.87 |
| Alpha | 4.16 | 3.45 |
| Beta | 0.48 | 0.81 |
| Sharpe Ratio | 0.13 | 0.72 |
| Treynor Ratio | 1.5 | 6.79 |
The iShares Gold Trust (IAU) has a Mean Return of 0.23 with a Treynor Ratio of 1.5 and a Sharpe Ratio of 0.13. Its R-squared is 16.03 while IAU’s Alpha is 4.16. Furthermore, the fund has a Standard Deviation of 16.97 and a Beta of 0.48.
The iShares Preferred and Income Securities ETF (PFF) has a Alpha of 3.45 with a Beta of 0.81 and a R-squared of 9.39. Its Treynor Ratio is 6.79 while PFF’s Mean Return is 0.52. Furthermore, the fund has a Sharpe Ratio of 0.72 and a Standard Deviation of 7.87.
IAU’s Mean Return is 0.29 points lower than that of PFF and its R-squared is 6.64 points higher. With a Standard Deviation of 16.97, IAU is slightly more volatile than PFF. The Alpha and Beta of IAU are 0.71 points higher and 0.33 points lower than PFF’s Alpha and Beta.
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Performance
Annual Returns
| Year | IAU | PFF |
| 2020 | 23.86% | 7.94% |
| 2019 | 18.54% | 15.62% |
| 2018 | -1.39% | -4.77% |
| 2017 | 11.58% | 8.33% |
| 2016 | 8.85% | 1.26% |
| 2015 | -11.65% | 4.62% |
| 2014 | -0.44% | 13.45% |
| 2013 | -27.96% | -0.59% |
| 2012 | 8.37% | 18.25% |
| 2011 | 8.66% | -2.2% |
| 2010 | 27.93% | 13.96% |
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 2012 was the strongest year for PFF, returning 18.25% on an annual basis. The poorest year for PFF in the last ten years was 2018, with a yield of -4.77%. Most years the iShares Preferred and Income Securities ETF has given investors modest returns, such as in 2015, 2020, and 2017, when gains were 4.62%, 7.94%, and 8.33% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IAU | $10,000 | $16,786 | 6.03% |
| PFF | $10,000 | $20,272 | 6.90% |
A $10,000 investment in IAU would have resulted in a final balance of $16,786. This is a profit of $6,786 over 11 years and amounts to a compound annual growth rate (CAGR) of 6.03%.
With a $10,000 investment in PFF, the end total would have been $20,272. This equates to a $10,272 profit over 11 years and a compound annual growth rate (CAGR) of 6.90%.
IAU’s CAGR is 0.87 percentage points lower than that of PFF and as a result, would have yielded $3,486 less on a $10,000 investment. Thus, IAU performed worse than PFF by 0.87% annually.
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