The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. IGSB is a iShares Short-Term Bond fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between IGSB and EMB? And which fund is better?
The expense ratio of IGSB is 0.33 percentage points lower than EMB’s (0.06% vs. 0.39%). IGSB is mostly comprised of BBB bonds and EMB has a high exposure to BBB bond. Overall, IGSB has provided lower returns than EMB over the past 11 years.
In this article, we’ll compare IGSB vs. EMB. We’ll look at performance and risk metrics, as well as at their holdings and industry exposure. Moreover, I’ll also discuss IGSB’s and EMB’s fund composition, annual returns, and portfolio growth and examine how these affect their overall returns.
|Name||iShares 1-5 Year Investment Grade Corporate Bond ETF||iShares J.P. Morgan USD Emerging Markets Bond ETF|
|Category||Short-Term Bond||Emerging Markets Bond|
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 J.P. Morgan USD Emerging Markets Bond ETF (EMB) is a Emerging Markets Bond fund that is issued by iShares. It currently has 19.76B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 3.85% with an expense ratio of 0.39%.
IGSB’s dividend yield is 1.83% lower than that of EMB (2.02% vs. 3.85%). Also, IGSB yielded on average 3.93% less per year over the past decade (2.51% vs. 6.43%). The expense ratio of IGSB is 0.33 percentage points lower than EMB’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.
|EMB Bond Sectors||Weight|
EMB’s Top Bond Sectors are ratings of BBB, B, BB, A, and AA at 33.79%, 21.97%, 16.92%, 13.67%, and 7.97%. The fund is less weighted towards Below B (4.49%), Others (1.11%), and AAA (0.09%) rated bonds.
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The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Sharpe Ratio of 0.82 with a Beta of 0.34 and a Treynor Ratio of 4.82. Its R-squared is 26.13 while IGSB’s Standard Deviation is 2. Furthermore, the fund has a Alpha of 0.69 and a Mean Return of 0.19.
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a Standard Deviation of 8.44 with a R-squared of 23.34 and a Sharpe Ratio of 0.55. Its Treynor Ratio is 3.24 while EMB’s Mean Return is 0.44. Furthermore, the fund has a Beta of 1.36 and a Alpha of 0.89.
IGSB’s Mean Return is 0.25 points lower than that of EMB and its R-squared is 2.79 points higher. With a Standard Deviation of 2, IGSB is slightly less volatile than EMB. The Alpha and Beta of IGSB are 0.20 points lower and 1.02 points lower than EMB’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 2012 was the strongest year for EMB, returning 17.64% on an annual basis. The poorest year for EMB in the last ten years was 2013, with a yield of -7.42%. Most years the iShares J.P. Morgan USD Emerging Markets Bond ETF has given investors modest returns, such as in 2014, 2011, and 2016, when gains were 6.69%, 7.2%, and 9.41% 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 EMB, the end total would have been $19,295. This equates to a $9,295 profit over 11 years and a compound annual growth rate (CAGR) of 6.43%.
IGSB’s CAGR is 3.93 percentage points lower than that of EMB and as a result, would have yielded $6,192 less on a $10,000 investment. Thus, IGSB performed worse than EMB by 3.93% annually.
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