IGSB vs. ACWI: What’s The Difference?

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. IGSB is a iShares Short-Term Bond fund and ACWI is a iShares N/A fund. So, what’s the difference between IGSB and ACWI? And which fund is better?

The expense ratio of IGSB is 0.26 percentage points lower than ACWI’s (0.06% vs. 0.32%). IGSB is mostly comprised of BBB bonds while ACWI has a high exposure to the technology sector. Overall, IGSB has provided lower returns than ACWI over the past 11 years.

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

Summary

IGSB ACWI
Name iShares 1-5 Year Investment Grade Corporate Bond ETF iShares MSCI ACWI ETF
Category Short-Term Bond N/A
Issuer iShares iShares
AUM 26.63B 16.85B
Avg. Return 2.51% 10.21%
Div. Yield 2.02% 1.39%
Expense Ratio 0.06% 0.32%

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

IGSB’s dividend yield is 0.63% higher than that of ACWI (2.02% vs. 1.39%). Also, IGSB yielded on average 7.71% less per year over the past decade (2.51% vs. 10.21%). The expense ratio of IGSB is 0.26 percentage points lower than ACWI’s (0.06% vs. 0.32%).

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Fund Composition

Holdings

IGSB - Holdings

IGSB Bond Sectors Weight
BBB 50.48%
A 40.04%
AA 7.46%
AAA 2.21%
BB 0.09%
Below B 0.0%
B 0.0%
US Government 0.0%
Others -0.28%

IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.

ACWI - Holdings

ACWI Holdings Weight
Apple Inc 3.44%
Microsoft Corp 2.91%
Amazon.com Inc 2.21%
Facebook Inc A 1.25%
Alphabet Inc Class C 1.12%
Alphabet Inc A 1.09%
Taiwan Semiconductor Manufacturing Co Ltd 0.79%
Tesla Inc 0.78%
NVIDIA Corp 0.74%
JPMorgan Chase & Co 0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

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Risk Analysis

IGSB ACWI
Mean Return 0.19 0.89
R-squared 26.13 99.96
Std. Deviation 2 14.05
Alpha 0.69 0.15
Beta 0.34 1
Sharpe Ratio 0.82 0.71
Treynor Ratio 4.82 9.45

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Beta of 0.34 with a Alpha of 0.69 and a R-squared of 26.13. Its Mean Return is 0.19 while IGSB’s Sharpe Ratio is 0.82. Furthermore, the fund has a Treynor Ratio of 4.82 and a Standard Deviation of 2.

The iShares MSCI ACWI ETF (ACWI) has a Treynor Ratio of 9.45 with a R-squared of 99.96 and a Beta of 1. Its Mean Return is 0.89 while ACWI’s Standard Deviation is 14.05. Furthermore, the fund has a Sharpe Ratio of 0.71 and a Alpha of 0.15.

IGSB’s Mean Return is 0.70 points lower than that of ACWI and its R-squared is 73.83 points lower. With a Standard Deviation of 2, IGSB is slightly less volatile than ACWI. The Alpha and Beta of IGSB are 0.54 points higher and 0.66 points lower than ACWI’s Alpha and Beta.

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Performance

Annual Returns

IGSB vs. ACWI - Annual Returns

Year IGSB ACWI
2020 5.26% 16.38%
2019 7.01% 26.7%
2018 1.34% -9.15%
2017 1.41% 24.35%
2016 1.77% 8.22%
2015 0.7% -2.39%
2014 0.74% 4.64%
2013 1.03% 22.91%
2012 3.28% 15.99%
2011 1.34% -7.6%
2010 3.69% 12.31%

IGSB had its best year in 2019 with an annual return of 7.01%. IGSB’s worst year over the past decade yielded 0.7% and occurred in 2015. In most years the iShares 1-5 Year Investment Grade Corporate Bond ETF provided moderate returns such as in 2011, 2017, and 2016 where annual returns amounted to 1.34%, 1.41%, and 1.77% respectively.

The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.

Portfolio Growth

IGSB vs. ACWI - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IGSB $10,000 $13,103 2.51%
ACWI $10,000 $27,241 10.21%

A $10,000 investment in IGSB would have resulted in a final balance of $13,103. This is a profit of $3,103 over 11 years and amounts to a compound annual growth rate (CAGR) of 2.51%.

With a $10,000 investment in ACWI, the end total would have been $27,241. This equates to a $17,241 profit over 11 years and a compound annual growth rate (CAGR) of 10.21%.

IGSB’s CAGR is 7.71 percentage points lower than that of ACWI and as a result, would have yielded $14,138 less on a $10,000 investment. Thus, IGSB performed worse than ACWI by 7.71% annually.


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