The iShares Core S&P Mid-Cap ETF (IJH) and the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) are both among the Top 100 ETFs. IJH is a iShares Mid-Cap Blend fund and LQD is a iShares Corporate Bond fund. So, what’s the difference between IJH and LQD? And which fund is better?
The expense ratio of IJH is 0.09 percentage points lower than LQD’s (0.05% vs. 0.14%). IJH also has a high exposure to the industrials sector while LQD is mostly comprised of BBB bonds. Overall, IJH has provided higher returns than LQD over the past ten years.
In this article, we’ll compare IJH vs. LQD. We’ll look at performance and industry exposure, as well as at their portfolio growth and holdings. Moreover, I’ll also discuss IJH’s and LQD’s fund composition, annual returns, and risk metrics and examine how these affect their overall returns.
|Name||iShares Core S&P Mid-Cap ETF||iShares iBoxx $ Investment Grade Corporate Bond ETF|
|Category||Mid-Cap Blend||Corporate Bond|
The iShares Core S&P Mid-Cap ETF (IJH) is a Mid-Cap Blend fund that is issued by iShares. It currently has 63.4B total assets under management and has yielded an average annual return of 13.50% over the past 10 years. The fund has a dividend yield of 1.07% with an expense ratio of 0.05%.
The iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) is a Corporate Bond fund that is issued by iShares. It currently has 40.23B total assets under management and has yielded an average annual return of 6.58% over the past 10 years. The fund has a dividend yield of 2.48% with an expense ratio of 0.14%.
IJH’s dividend yield is 1.41% lower than that of LQD (1.07% vs. 2.48%). Also, IJH yielded on average 6.92% more per year over the past decade (13.50% vs. 6.58%). The expense ratio of IJH is 0.09 percentage points lower than LQD’s (0.05% vs. 0.14%).
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|Molina Healthcare Inc||0.68%|
|Fair Isaac Corp||0.64%|
|Camden Property Trust||0.62%|
|XPO Logistics Inc||0.6%|
|SolarEdge Technologies Inc||0.57%|
|FactSet Research Systems Inc||0.57%|
IJH’s Top Holdings are Bio-Techne Corp, Molina Healthcare Inc, Cognex Corp, Fair Isaac Corp, and Camden Property Trust at 0.8%, 0.68%, 0.68%, 0.64%, and 0.62%.
XPO Logistics Inc (0.6%), Masimo Corp (0.59%), and SolarEdge Technologies Inc (0.57%) have a slightly smaller but still significant weight. FactSet Research Systems Inc and Graco Inc are also represented in the IJH’s holdings at 0.57% and 0.56%.
|LQD Bond Sectors||Weight|
LQD’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.92%, 37.97%, 8.49%, 2.7%, and 0.05%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.
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The iShares Core S&P Mid-Cap ETF (IJH) has a Standard Deviation of 16.8 with a Sharpe Ratio of 0.77 and a Treynor Ratio of 10.55. Its Mean Return is 1.13 while IJH’s Beta is 1.15. Furthermore, the fund has a Alpha of -4.01 and a R-squared of 86.39.
The iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) has a Mean Return of 0.47 with a Sharpe Ratio of 0.85 and a R-squared of 66.93. Its Beta is 1.62 while LQD’s Treynor Ratio is 3.08. Furthermore, the fund has a Standard Deviation of 5.94 and a Alpha of 0.52.
IJH’s Mean Return is 0.66 points higher than that of LQD and its R-squared is 19.46 points higher. With a Standard Deviation of 16.8, IJH is slightly more volatile than LQD. The Alpha and Beta of IJH are 4.53 points lower and 0.47 points lower than LQD’s Alpha and Beta.
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IJH had its best year in 2013 with an annual return of 33.4%. IJH’s worst year over the past decade yielded -11.14% and occurred in 2018. In most years the iShares Core S&P Mid-Cap ETF provided moderate returns such as in 2020, 2017, and 2012 where annual returns amounted to 13.61%, 16.19%, and 17.76% respectively.
The year 2019 was the strongest year for LQD, returning 17.13% on an annual basis. The poorest year for LQD in the last ten years was 2018, with a yield of -3.76%. Most years the iShares iBoxx $ Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2017, 2014, and 2011, when gains were 7.16%, 8.57%, and 8.89% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IJH would have resulted in a final balance of $37,266. This is a profit of $27,266 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.50%.
With a $10,000 investment in LQD, the end total would have been $19,776. This equates to a $9,776 profit over 11 years and a compound annual growth rate (CAGR) of 6.58%.
IJH’s CAGR is 6.92 percentage points higher than that of LQD and as a result, would have yielded $17,490 more on a $10,000 investment. Thus, IJH outperformed LQD by 6.92% annually.
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