IJR vs. HYG: What’s The Difference?

The iShares Core S&P Small-Cap ETF (IJR) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and HYG is a iShares High Yield Bond fund. So, what’s the difference between IJR and HYG? And which fund is better?

The expense ratio of IJR is 0.42 percentage points lower than HYG’s (0.06% vs. 0.48%). IJR also has a high exposure to the industrials sector while HYG is mostly comprised of BB bonds. Overall, IJR has provided higher returns than HYG over the past ten years.

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

Summary

IJR HYG
Name iShares Core S&P Small-Cap ETF iShares iBoxx $ High Yield Corporate Bond ETF
Category Small Blend High Yield Bond
Issuer iShares iShares
AUM 68.64B 20.03B
Avg. Return 13.97% 6.42%
Div. Yield 0.96% 4.44%
Expense Ratio 0.06% 0.48%

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 iBoxx $ High Yield Corporate Bond ETF (HYG) is a High Yield Bond fund that is issued by iShares. It currently has 20.03B total assets under management and has yielded an average annual return of 6.42% over the past 10 years. The fund has a dividend yield of 4.44% with an expense ratio of 0.48%.

IJR’s dividend yield is 3.48% lower than that of HYG (0.96% vs. 4.44%). Also, IJR yielded on average 7.55% more per year over the past decade (13.97% vs. 6.42%). The expense ratio of IJR is 0.42 percentage points lower than HYG’s (0.06% vs. 0.48%).

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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%.

HYG - Holdings

HYG Bond Sectors Weight
BB 56.53%
B 31.27%
Below B 11.4%
BBB 0.61%
AAA 0.28%
A 0.0%
AA 0.0%
US Government 0.0%
Others -0.09%

HYG’s Top Bond Sectors are ratings of BB, B, Below B, BBB, and AAA at 56.53%, 31.27%, 11.4%, 0.61%, and 0.28%. The fund is less weighted towards A (0.0%), AA (0.0%), and US Government (0.0%) rated bonds.

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Risk Analysis

IJR HYG
Mean Return 1.21 0.46
R-squared 76.03 4.1
Std. Deviation 18.68 6.96
Alpha -3.7 3.58
Beta 1.2 0.48
Sharpe Ratio 0.74 0.7
Treynor Ratio 10.77 10.01

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

The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) has a Standard Deviation of 6.96 with a Treynor Ratio of 10.01 and a Alpha of 3.58. Its R-squared is 4.1 while HYG’s Sharpe Ratio is 0.7. Furthermore, the fund has a Mean Return of 0.46 and a Beta of 0.48.

IJR’s Mean Return is 0.75 points higher than that of HYG and its R-squared is 71.93 points higher. With a Standard Deviation of 18.68, IJR is slightly more volatile than HYG. The Alpha and Beta of IJR are 7.28 points lower and 0.72 points higher than HYG’s Alpha and Beta.

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Performance

Annual Returns

IJR vs. HYG - Annual Returns

Year IJR HYG
2020 11.24% 4.12%
2019 22.79% 14.23%
2018 -8.43% -1.93%
2017 13.2% 6.09%
2016 26.49% 13.92%
2015 -2.0% -5.55%
2014 5.67% 2.0%
2013 41.36% 5.9%
2012 16.28% 13.83%
2011 0.9% 5.89%
2010 26.14% 12.07%

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 2019 was the strongest year for HYG, returning 14.23% on an annual basis. The poorest year for HYG in the last ten years was 2015, with a yield of -5.55%. Most years the iShares iBoxx $ High Yield Corporate Bond ETF has given investors modest returns, such as in 2011, 2013, and 2017, when gains were 5.89%, 5.9%, and 6.09% respectively.

Portfolio Growth

IJR vs. HYG - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IJR $10,000 $38,800 13.97%
HYG $10,000 $19,427 6.42%

A $10,000 investment in IJR would have resulted in a final balance of $38,800. This is a profit of $28,800 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.97%.

With a $10,000 investment in HYG, the end total would have been $19,427. This equates to a $9,427 profit over 11 years and a compound annual growth rate (CAGR) of 6.42%.

IJR’s CAGR is 7.55 percentage points higher than that of HYG and as a result, would have yielded $19,373 more on a $10,000 investment. Thus, IJR outperformed HYG by 7.55% annually.


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