IGSB vs. DGRO: What’s The Difference?

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) and the iShares Core Dividend Growth ETF (DGRO) are both among the Top 100 ETFs. IGSB is a iShares Short-Term Bond fund and DGRO is a iShares Large Value fund. So, what’s the difference between IGSB and DGRO? And which fund is better?

The expense ratio of IGSB is 0.02 percentage points lower than DGRO’s (0.06% vs. 0.08%). IGSB is mostly comprised of BBB bonds while DGRO has a high exposure to the technology sector. Overall, IGSB has provided lower returns than DGRO over the past 6 years.

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

Summary

IGSB DGRO
Name iShares 1-5 Year Investment Grade Corporate Bond ETF iShares Core Dividend Growth ETF
Category Short-Term Bond Large Value
Issuer iShares iShares
AUM 26.63B 20B
Avg. Return 2.51% 12.46%
Div. Yield 2.02% 2.04%
Expense Ratio 0.06% 0.08%

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 Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.

IGSB’s dividend yield is 0.02% lower than that of DGRO (2.02% vs. 2.04%). Also, IGSB yielded on average 9.95% less per year over the past decade (2.51% vs. 12.46%). The expense ratio of IGSB is 0.02 percentage points lower than DGRO’s (0.06% vs. 0.08%).

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.

DGRO - Holdings

DGRO Holdings Weight
Microsoft Corp 3.29%
Apple Inc 3.26%
Pfizer Inc 2.89%
Johnson & Johnson 2.87%
Procter & Gamble Co 2.79%
Verizon Communications Inc 2.68%
JPMorgan Chase & Co 2.57%
The Home Depot Inc 2.35%
Merck & Co Inc 2.11%
Cisco Systems Inc 1.98%

DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.

Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.

Risk Analysis

IGSB DGRO
Mean Return 0.19 0
R-squared 26.13 0
Std. Deviation 2 0
Alpha 0.69 0
Beta 0.34 0
Sharpe Ratio 0.82 0
Treynor Ratio 4.82 0

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

The iShares Core Dividend Growth ETF (DGRO) has a Mean Return of 0 with a R-squared of 0 and a Treynor Ratio of 0. Its Standard Deviation is 0 while DGRO’s Alpha is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Beta of 0.

IGSB’s Mean Return is 0.19 points higher than that of DGRO and its R-squared is 26.13 points higher. With a Standard Deviation of 2, IGSB is slightly more volatile than DGRO. The Alpha and Beta of IGSB are 0.69 points higher and 0.34 points higher than DGRO’s Alpha and Beta.

Performance

Annual Returns

IGSB vs. DGRO - Annual Returns

Year IGSB DGRO
2020 5.26% 9.47%
2019 7.01% 30.02%
2018 1.34% -2.24%
2017 1.41% 22.84%
2016 1.77% 15.27%
2015 0.7% -0.62%
2014 0.74% 0.0%
2013 1.03% 0.0%
2012 3.28% 0.0%
2011 1.34% 0.0%
2010 3.69% 0.0%

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 DGRO, returning 30.02% on an annual basis. The poorest year for DGRO in the last ten years was 2018, with a yield of -2.24%. Most years the iShares Core Dividend Growth ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

IGSB vs. DGRO - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IGSB $10,000 $11,863 2.51%
DGRO $10,000 $19,580 12.46%

A $10,000 investment in IGSB would have resulted in a final balance of $11,863. This is a profit of $1,863 over 6 years and amounts to a compound annual growth rate (CAGR) of 2.51%.

With a $10,000 investment in DGRO, the end total would have been $19,580. This equates to a $9,580 profit over 6 years and a compound annual growth rate (CAGR) of 12.46%.

IGSB’s CAGR is 9.95 percentage points lower than that of DGRO and as a result, would have yielded $7,717 less on a $10,000 investment. Thus, IGSB performed worse than DGRO by 9.95% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply