The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. IGSB is a iShares Short-Term Bond fund and TLT is a iShares Long Government fund. So, what’s the difference between IGSB and TLT? And which fund is better?
The expense ratio of IGSB is 0.09 percentage points lower than TLT’s (0.06% vs. 0.15%). IGSB is mostly comprised of BBB bonds and TLT has a high exposure to AAA bond. Overall, IGSB has provided lower returns than TLT over the past 11 years.
In this article, we’ll compare IGSB vs. TLT. We’ll look at performance and fund composition, as well as at their annual returns and portfolio growth. Moreover, I’ll also discuss IGSB’s and TLT’s industry exposure, holdings, and risk metrics and examine how these affect their overall returns.
|Name||iShares 1-5 Year Investment Grade Corporate Bond ETF||iShares 20+ Year Treasury Bond ETF|
|Category||Short-Term Bond||Long 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 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.
IGSB’s dividend yield is 0.52% higher than that of TLT (2.02% vs. 1.5%). Also, IGSB yielded on average 6.49% less per year over the past decade (2.51% vs. 9.00%). The expense ratio of IGSB is 0.09 percentage points lower than TLT’s (0.06% vs. 0.15%).
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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.
|TLT Bond Sectors||Weight|
TLT’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.
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The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Alpha of 0.69 with a Standard Deviation of 2 and a Mean Return of 0.19. Its Sharpe Ratio is 0.82 while IGSB’s Treynor Ratio is 4.82. Furthermore, the fund has a Beta of 0.34 and a R-squared of 26.13.
The iShares 20+ Year Treasury Bond ETF (TLT) has a Sharpe Ratio of 0.55 with a Standard Deviation of 12.76 and a Beta of 3.54. Its R-squared is 68.76 while TLT’s Treynor Ratio is 1.82. Furthermore, the fund has a Alpha of -2.83 and a Mean Return of 0.63.
IGSB’s Mean Return is 0.44 points lower than that of TLT and its R-squared is 42.63 points lower. With a Standard Deviation of 2, IGSB is slightly less volatile than TLT. The Alpha and Beta of IGSB are 3.52 points higher and 3.20 points lower than TLT’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 2011 was the strongest year for TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% 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 TLT, the end total would have been $23,809. This equates to a $13,809 profit over 11 years and a compound annual growth rate (CAGR) of 9.00%.
IGSB’s CAGR is 6.49 percentage points lower than that of TLT and as a result, would have yielded $10,706 less on a $10,000 investment. Thus, IGSB performed worse than TLT by 6.49% annually.
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