IJR vs. GOVT: What’s The Difference?

The iShares Core S&P Small-Cap ETF (IJR) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between IJR and GOVT? And which fund is better?

The expense ratio of IJR is 0.01 percentage points higher than GOVT’s (0.06% vs. 0.05%). IJR also has a high exposure to the industrials sector while GOVT is mostly comprised of AAA bonds. Overall, IJR has provided higher returns than GOVT over the past ten years.

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

Summary

IJR GOVT
Name iShares Core S&P Small-Cap ETF iShares U.S. Treasury Bond ETF
Category Small Blend Intermediate Government
Issuer iShares iShares
AUM 68.64B 17.07B
Avg. Return 13.97% 2.67%
Div. Yield 0.96% 1.0%
Expense Ratio 0.06% 0.05%

The iShares Core S&P Small-Cap ETF (IJR) is a Small Blend fund that is issued by iShares. It currently has 68.64B total assets under management and has yielded an average annual return of 13.97% over the past 10 years. The fund has a dividend yield of 0.96% 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%.

IJR’s dividend yield is 0.04% lower than that of GOVT (0.96% vs. 1.0%). Also, IJR yielded on average 11.29% more per year over the past decade (13.97% vs. 2.67%). The expense ratio of IJR is 0.01 percentage points higher than GOVT’s (0.06% vs. 0.05%).

Fund Composition

Holdings

IJR - Holdings

IJR Holdings Weight
BlackRock Cash Funds Treasury SL Agency 1.08%
GameStop Corp Class A 0.86%
Omnicell Inc 0.61%
Stamps.com Inc 0.58%
Saia Inc 0.57%
Power Integrations Inc 0.57%
Exponent Inc 0.54%
NeoGenomics Inc 0.53%
Chart Industries Inc 0.53%
Macy’s Inc 0.51%

IJR’s Top Holdings are BlackRock Cash Funds Treasury SL Agency, GameStop Corp Class A, Omnicell Inc, Stamps.com Inc, and Saia Inc at 1.08%, 0.86%, 0.61%, 0.58%, and 0.57%.

Power Integrations Inc (0.57%), Exponent Inc (0.54%), and NeoGenomics Inc (0.53%) have a slightly smaller but still significant weight. Chart Industries Inc and Macy’s Inc are also represented in the IJR’s holdings at 0.53% and 0.51%.

GOVT - Holdings

GOVT Bond Sectors Weight
AAA 100.0%
Others 0.0%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

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.

Risk Analysis

IJR GOVT
Mean Return 1.21 0
R-squared 76.03 0
Std. Deviation 18.68 0
Alpha -3.7 0
Beta 1.2 0
Sharpe Ratio 0.74 0
Treynor Ratio 10.77 0

The iShares Core S&P Small-Cap ETF (IJR) has a Standard Deviation of 18.68 with a Beta of 1.2 and a Mean Return of 1.21. Its Alpha is -3.7 while IJR’s Sharpe Ratio is 0.74. Furthermore, the fund has a R-squared of 76.03 and a Treynor Ratio of 10.77.

The iShares U.S. Treasury Bond ETF (GOVT) has a Alpha of 0 with a Beta of 0 and a R-squared of 0. Its Standard Deviation is 0 while GOVT’s Mean Return is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Treynor Ratio of 0.

IJR’s Mean Return is 1.21 points higher than that of GOVT and its R-squared is 76.03 points higher. With a Standard Deviation of 18.68, IJR is slightly more volatile than GOVT. The Alpha and Beta of IJR are 3.70 points lower and 1.20 points higher than GOVT’s Alpha and Beta.

Performance

Annual Returns

IJR vs. GOVT - Annual Returns

Year IJR GOVT
2020 11.24% 7.92%
2019 22.79% 6.71%
2018 -8.43% 0.74%
2017 13.2% 2.19%
2016 26.49% 0.92%
2015 -2.0% 0.76%
2014 5.67% 4.99%
2013 41.36% -2.84%
2012 16.28% 0.0%
2011 0.9% 0.0%
2010 26.14% 0.0%

IJR had its best year in 2013 with an annual return of 41.36%. IJR’s worst year over the past decade yielded -8.43% and occurred in 2018. In most years the iShares Core S&P Small-Cap ETF provided moderate returns such as in 2020, 2017, and 2012 where annual returns amounted to 11.24%, 13.2%, and 16.28% 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.

Portfolio Growth

IJR vs. GOVT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IJR $10,000 $26,217 13.97%
GOVT $10,000 $12,297 2.67%

A $10,000 investment in IJR would have resulted in a final balance of $26,217. This is a profit of $16,217 over 8 years and amounts to a compound annual growth rate (CAGR) of 13.97%.

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%.

IJR’s CAGR is 11.29 percentage points higher than that of GOVT and as a result, would have yielded $13,920 more on a $10,000 investment. Thus, IJR outperformed GOVT by 11.29% annually.


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