IGSB vs. IWN: What’s The Difference?

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. IGSB is a iShares Short-Term Bond fund and IWN is a iShares Small Value fund. So, what’s the difference between IGSB and IWN? And which fund is better?

The expense ratio of IGSB is 0.18 percentage points lower than IWN’s (0.06% vs. 0.24%). IGSB is mostly comprised of BBB bonds while IWN has a high exposure to the financial services sector. Overall, IGSB has provided lower returns than IWN over the past 11 years.

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

Summary

IGSB IWN
Name iShares 1-5 Year Investment Grade Corporate Bond ETF iShares Russell 2000 Value ETF
Category Short-Term Bond Small Value
Issuer iShares iShares
AUM 26.63B 15.48B
Avg. Return 2.51% 10.96%
Div. Yield 2.02% 1.26%
Expense Ratio 0.06% 0.24%

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 Russell 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.

IGSB’s dividend yield is 0.76% higher than that of IWN (2.02% vs. 1.26%). Also, IGSB yielded on average 8.45% less per year over the past decade (2.51% vs. 10.96%). The expense ratio of IGSB is 0.18 percentage points lower than IWN’s (0.06% vs. 0.24%).

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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.

IWN - Holdings

IWN Holdings Weight
AMC Entertainment Holdings Inc Class A 1.06%
Tenet Healthcare Corp 0.47%
Stag Industrial Inc 0.47%
Ovintiv Inc 0.45%
EMCOR Group Inc 0.42%
Valley National Bancorp 0.37%
Chesapeake Energy Corp Ordinary Shares – New 0.37%
Agree Realty Corp 0.36%
Macy’s Inc 0.35%
Essent Group Ltd 0.35%

IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.

Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.

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Risk Analysis

IGSB IWN
Mean Return 0.19 1.01
R-squared 26.13 72.64
Std. Deviation 2 19.28
Alpha 0.69 -6.32
Beta 0.34 1.21
Sharpe Ratio 0.82 0.59
Treynor Ratio 4.82 8.3

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

The iShares Russell 2000 Value ETF (IWN) has a R-squared of 72.64 with a Beta of 1.21 and a Mean Return of 1.01. Its Sharpe Ratio is 0.59 while IWN’s Alpha is -6.32. Furthermore, the fund has a Treynor Ratio of 8.3 and a Standard Deviation of 19.28.

IGSB’s Mean Return is 0.82 points lower than that of IWN and its R-squared is 46.51 points lower. With a Standard Deviation of 2, IGSB is slightly less volatile than IWN. The Alpha and Beta of IGSB are 7.01 points higher and 0.87 points lower than IWN’s Alpha and Beta.

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Performance

Annual Returns

IGSB vs. IWN - Annual Returns

Year IGSB IWN
2020 5.26% 4.5%
2019 7.01% 22.17%
2018 1.34% -12.94%
2017 1.41% 7.73%
2016 1.77% 31.64%
2015 0.7% -7.53%
2014 0.74% 4.13%
2013 1.03% 34.3%
2012 3.28% 17.92%
2011 1.34% -5.64%
2010 3.69% 24.29%

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 IWN, returning 34.3% on an annual basis. The poorest year for IWN in the last ten years was 2018, with a yield of -12.94%. Most years the iShares Russell 2000 Value ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 4.5%, 7.73%, and 17.92% respectively.

Portfolio Growth

IGSB vs. IWN - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IGSB $10,000 $13,103 2.51%
IWN $10,000 $28,189 10.96%

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 IWN, the end total would have been $28,189. This equates to a $18,189 profit over 11 years and a compound annual growth rate (CAGR) of 10.96%.

IGSB’s CAGR is 8.45 percentage points lower than that of IWN and as a result, would have yielded $15,086 less on a $10,000 investment. Thus, IGSB performed worse than IWN by 8.45% annually.


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