The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) and the iShares MSCI EAFE Value ETF (EFV) are both among the Top 100 ETFs. IGSB is a iShares Short-Term Bond fund and EFV is a iShares Foreign Large Value fund. So, what’s the difference between IGSB and EFV? And which fund is better?
The expense ratio of IGSB is 0.33 percentage points lower than EFV’s (0.06% vs. 0.39%). IGSB is mostly comprised of BBB bonds while EFV has a high exposure to the financial services sector. Overall, IGSB has provided lower returns than EFV over the past 11 years.
In this article, we’ll compare IGSB vs. EFV. We’ll look at annual returns and holdings, as well as at their fund composition and portfolio growth. Moreover, I’ll also discuss IGSB’s and EFV’s industry exposure, risk metrics, and performance and examine how these affect their overall returns.
|Name||iShares 1-5 Year Investment Grade Corporate Bond ETF||iShares MSCI EAFE Value ETF|
|Category||Short-Term Bond||Foreign Large Value|
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 EAFE Value ETF (EFV) is a Foreign Large Value fund that is issued by iShares. It currently has 14.37B total assets under management and has yielded an average annual return of 3.99% over the past 10 years. The fund has a dividend yield of 2.94% with an expense ratio of 0.39%.
IGSB’s dividend yield is 0.92% lower than that of EFV (2.02% vs. 2.94%). Also, IGSB yielded on average 1.49% less per year over the past decade (2.51% vs. 3.99%). The expense ratio of IGSB is 0.33 percentage points lower than EFV’s (0.06% vs. 0.39%).
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|IGSB Bond Sectors||Weight|
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.
|Toyota Motor Corp||2.21%|
|Commonwealth Bank of Australia||1.59%|
|HSBC Holdings PLC||1.4%|
|Rio Tinto PLC||1.1%|
EFV’s Top Holdings are Novartis AG, Toyota Motor Corp, Commonwealth Bank of Australia, Siemens AG, and Sanofi SA at 2.41%, 2.21%, 1.59%, 1.45%, and 1.42%.
HSBC Holdings PLC (1.4%), TotalEnergies SE (1.35%), and Allianz SE (1.23%) have a slightly smaller but still significant weight. GlaxoSmithKline PLC and Rio Tinto PLC are also represented in the EFV’s holdings at 1.18% and 1.1%.
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The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Sharpe Ratio of 0.82 with a Alpha of 0.69 and a Treynor Ratio of 4.82. Its R-squared is 26.13 while IGSB’s Beta is 0.34. Furthermore, the fund has a Standard Deviation of 2 and a Mean Return of 0.19.
The iShares MSCI EAFE Value ETF (EFV) has a Standard Deviation of 16.53 with a R-squared of 92.15 and a Treynor Ratio of 2.92. Its Beta is 1.05 while EFV’s Sharpe Ratio is 0.26. Furthermore, the fund has a Mean Return of 0.42 and a Alpha of -1.77.
IGSB’s Mean Return is 0.23 points lower than that of EFV and its R-squared is 66.02 points lower. With a Standard Deviation of 2, IGSB is slightly less volatile than EFV. The Alpha and Beta of IGSB are 2.46 points higher and 0.71 points lower than EFV’s Alpha and Beta.
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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 2013 was the strongest year for EFV, returning 22.61% on an annual basis. The poorest year for EFV in the last ten years was 2018, with a yield of -14.88%. Most years the iShares MSCI EAFE Value ETF has given investors modest returns, such as in 2020, 2010, and 2016, when gains were -2.78%, 3.18%, and 4.87% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 EFV, the end total would have been $14,134. This equates to a $4,134 profit over 11 years and a compound annual growth rate (CAGR) of 3.99%.
IGSB’s CAGR is 1.49 percentage points lower than that of EFV and as a result, would have yielded $1,031 less on a $10,000 investment. Thus, IGSB performed worse than EFV by 1.49% annually.
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