The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. IGSB is a iShares Short-Term Bond fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between IGSB and BIV? And which fund is better?
The expense ratio of IGSB is 0.01 percentage points higher than BIV’s (0.06% vs. 0.05%). IGSB is mostly comprised of BBB bonds and BIV has a high exposure to AAA bond. Overall, IGSB has provided lower returns than BIV over the past 11 years.
In this article, we’ll compare IGSB vs. BIV. We’ll look at annual returns and portfolio growth, as well as at their fund composition and holdings. Moreover, I’ll also discuss IGSB’s and BIV’s industry exposure, performance, and risk metrics and examine how these affect their overall returns.
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Summary
| IGSB | BIV | |
| Name | iShares 1-5 Year Investment Grade Corporate Bond ETF | Vanguard Intermediate-Term Bond Index Fund ETF Shares |
| Category | Short-Term Bond | Intermediate-Term Bond |
| Issuer | iShares | Vanguard |
| AUM | 26.63B | 39.05B |
| Avg. Return | 2.51% | 5.31% |
| Div. Yield | 2.02% | 2.06% |
| Expense Ratio | 0.06% | 0.05% |
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 Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.
IGSB’s dividend yield is 0.04% lower than that of BIV (2.02% vs. 2.06%). Also, IGSB yielded on average 2.81% less per year over the past decade (2.51% vs. 5.31%). The expense ratio of IGSB is 0.01 percentage points higher than BIV’s (0.06% vs. 0.05%).
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Fund Composition
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.
| BIV Bond Sectors | Weight |
| AAA | 54.51% |
| BBB | 25.24% |
| A | 16.97% |
| AA | 3.1% |
| Others | 0.15% |
| Below B | 0.03% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.
Risk Analysis
| IGSB | BIV | |
| Mean Return | 0.19 | 0.35 |
| R-squared | 26.13 | 95.12 |
| Std. Deviation | 2 | 4.09 |
| Alpha | 0.69 | -0.07 |
| Beta | 0.34 | 1.33 |
| Sharpe Ratio | 0.82 | 0.89 |
| Treynor Ratio | 4.82 | 2.72 |
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Sharpe Ratio of 0.82 with a R-squared of 26.13 and a Mean Return of 0.19. Its Standard Deviation is 2 while IGSB’s Beta is 0.34. Furthermore, the fund has a Treynor Ratio of 4.82 and a Alpha of 0.69.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Standard Deviation of 4.09 with a Sharpe Ratio of 0.89 and a R-squared of 95.12. Its Alpha is -0.07 while BIV’s Mean Return is 0.35. Furthermore, the fund has a Beta of 1.33 and a Treynor Ratio of 2.72.
IGSB’s Mean Return is 0.16 points lower than that of BIV and its R-squared is 68.99 points lower. With a Standard Deviation of 2, IGSB is slightly less volatile than BIV. The Alpha and Beta of IGSB are 0.76 points higher and 0.99 points lower than BIV’s Alpha and Beta.
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Performance
Annual Returns
| Year | IGSB | BIV |
| 2020 | 5.26% | 9.71% |
| 2019 | 7.01% | 10.19% |
| 2018 | 1.34% | -0.09% |
| 2017 | 1.41% | 3.8% |
| 2016 | 1.77% | 2.86% |
| 2015 | 0.7% | 1.23% |
| 2014 | 0.74% | 7.0% |
| 2013 | 1.03% | -3.44% |
| 2012 | 3.28% | 7.02% |
| 2011 | 1.34% | 10.62% |
| 2010 | 3.69% | 9.55% |
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 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IGSB | $10,000 | $13,103 | 2.51% |
| BIV | $10,000 | $17,492 | 5.31% |
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 BIV, the end total would have been $17,492. This equates to a $7,492 profit over 11 years and a compound annual growth rate (CAGR) of 5.31%.
IGSB’s CAGR is 2.81 percentage points lower than that of BIV and as a result, would have yielded $4,389 less on a $10,000 investment. Thus, IGSB performed worse than BIV by 2.81% annually.
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