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IGSB vs. VLUE: What’s The Difference?

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

The expense ratio of IGSB is 0.09 percentage points lower than VLUE’s (0.06% vs. 0.15%). IGSB is mostly comprised of BBB bonds while VLUE has a high exposure to the technology sector. Overall, IGSB has provided lower returns than VLUE over the past 7 years.

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

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Summary

IGSBVLUE
NameiShares 1-5 Year Investment Grade Corporate Bond ETFiShares MSCI USA Value Factor ETF
CategoryShort-Term BondLarge Value
IssueriSharesiShares
AUM26.63B15.95B
Avg. Return2.51%8.91%
Div. Yield2.02%1.89%
Expense Ratio0.06%0.15%

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 USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.

IGSB’s dividend yield is 0.13% higher than that of VLUE (2.02% vs. 1.89%). Also, IGSB yielded on average 6.40% less per year over the past decade (2.51% vs. 8.91%). The expense ratio of IGSB is 0.09 percentage points lower than VLUE’s (0.06% vs. 0.15%).

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Fund Composition

Holdings

IGSB - Holdings

IGSB Bond SectorsWeight
BBB50.48%
A40.04%
AA7.46%
AAA2.21%
BB0.09%
Below B0.0%
B0.0%
US Government0.0%
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.

VLUE - Holdings

VLUE HoldingsWeight
AT&T Inc7.13%
Intel Corp6.14%
General Motors Co3.19%
Micron Technology Inc3.14%
Cisco Systems Inc3.05%
International Business Machines Corp2.76%
Target Corp2.38%
Citigroup Inc2.32%
Ford Motor Co2.23%
Pfizer Inc2.17%

VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.

International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.

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Risk Analysis

IGSBVLUE
Mean Return0.190
R-squared26.130
Std. Deviation20
Alpha0.690
Beta0.340
Sharpe Ratio0.820
Treynor Ratio4.820

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 Standard Deviation is 2 while IGSB’s Mean Return is 0.19. Furthermore, the fund has a R-squared of 26.13 and a Beta of 0.34.

The iShares MSCI USA Value Factor ETF (VLUE) has a Sharpe Ratio of 0 with a Alpha of 0 and a Beta of 0. Its Mean Return is 0 while VLUE’s Standard Deviation is 0. Furthermore, the fund has a R-squared of 0 and a Treynor Ratio of 0.

IGSB’s Mean Return is 0.19 points higher than that of VLUE and its R-squared is 26.13 points higher. With a Standard Deviation of 2, IGSB is slightly more volatile than VLUE. The Alpha and Beta of IGSB are 0.69 points higher and 0.34 points higher than VLUE’s Alpha and Beta.

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Performance

Annual Returns

IGSB vs. VLUE - Annual Returns

YearIGSBVLUE
20205.26%-0.32%
20197.01%27.47%
20181.34%-11.18%
20171.41%21.97%
20161.77%15.68%
20150.7%-3.54%
20140.74%12.29%
20131.03%0.0%
20123.28%0.0%
20111.34%0.0%
20103.69%0.0%

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 2019 was the strongest year for VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

IGSB vs. VLUE - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IGSB$10,000$11,9502.51%
VLUE$10,000$17,2478.91%

A $10,000 investment in IGSB would have resulted in a final balance of $11,950. This is a profit of $1,950 over 7 years and amounts to a compound annual growth rate (CAGR) of 2.51%.

With a $10,000 investment in VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.

IGSB’s CAGR is 6.40 percentage points lower than that of VLUE and as a result, would have yielded $5,297 less on a $10,000 investment. Thus, IGSB performed worse than VLUE by 6.40% annually.


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