The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. IGSB is a iShares Short-Term Bond fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between IGSB and GOVT? And which fund is better?
The expense ratio of IGSB is 0.01 percentage points higher than GOVT’s (0.06% vs. 0.05%). IGSB is mostly comprised of BBB bonds and GOVT has a high exposure to AAA bond. Overall, IGSB has provided lower returns than GOVT over the past 8 years.
In this article, we’ll compare IGSB vs. GOVT. We’ll look at performance and fund composition, as well as at their holdings and industry exposure. Moreover, I’ll also discuss IGSB’s and GOVT’s annual returns, portfolio growth, and risk metrics and examine how these affect their overall returns.
|Name||iShares 1-5 Year Investment Grade Corporate Bond ETF||iShares U.S. Treasury Bond ETF|
|Category||Short-Term Bond||Intermediate Government|
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 U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.
IGSB’s dividend yield is 1.02% higher than that of GOVT (2.02% vs. 1.0%). Also, IGSB yielded on average 0.17% less per year over the past decade (2.51% vs. 2.67%). The expense ratio of IGSB is 0.01 percentage points higher than GOVT’s (0.06% vs. 0.05%).
|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.
|GOVT Bond Sectors||Weight|
GOVT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Sharpe Ratio of 0.82 with a Standard Deviation of 2 and a Beta of 0.34. Its Treynor Ratio is 4.82 while IGSB’s Mean Return is 0.19. Furthermore, the fund has a R-squared of 26.13 and a Alpha of 0.69.
The iShares U.S. Treasury Bond ETF (GOVT) has a Standard Deviation of 0 with a Beta of 0 and a Alpha of 0. Its R-squared is 0 while GOVT’s Sharpe Ratio is 0. Furthermore, the fund has a Mean Return of 0 and a Treynor Ratio of 0.
IGSB’s Mean Return is 0.19 points higher than that of GOVT and its R-squared is 26.13 points higher. With a Standard Deviation of 2, IGSB is slightly more volatile than GOVT. The Alpha and Beta of IGSB are 0.69 points higher and 0.34 points higher than GOVT’s Alpha and Beta.
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 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IGSB would have resulted in a final balance of $12,073. This is a profit of $2,073 over 8 years and amounts to a compound annual growth rate (CAGR) of 2.51%.
With a $10,000 investment in GOVT, the end total would have been $12,297. This equates to a $2,297 profit over 8 years and a compound annual growth rate (CAGR) of 2.67%.
IGSB’s CAGR is 0.17 percentage points lower than that of GOVT and as a result, would have yielded $224 less on a $10,000 investment. Thus, IGSB performed worse than GOVT by 0.17% annually.
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)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) 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!
3) 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!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.