IJR vs. IEF: What’s The Difference?

The iShares Core S&P Small-Cap ETF (IJR) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and IEF is a iShares Long Government fund. So, what’s the difference between IJR and IEF? And which fund is better?

The expense ratio of IJR is 0.09 percentage points lower than IEF’s (0.06% vs. 0.15%). IJR also has a high exposure to the industrials sector while IEF is mostly comprised of AAA bonds. Overall, IJR has provided higher returns than IEF over the past ten years.

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

Summary

IJR IEF
Name iShares Core S&P Small-Cap ETF iShares 7-10 Year Treasury Bond ETF
Category Small Blend Long Government
Issuer iShares iShares
AUM 68.64B 13.44B
Avg. Return 13.97% 5.06%
Div. Yield 0.96% 0.84%
Expense Ratio 0.06% 0.15%

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 7-10 Year Treasury Bond ETF (IEF) is a Long Government fund that is issued by iShares. It currently has 13.44B total assets under management and has yielded an average annual return of 5.06% over the past 10 years. The fund has a dividend yield of 0.84% with an expense ratio of 0.15%.

IJR’s dividend yield is 0.12% higher than that of IEF (0.96% vs. 0.84%). Also, IJR yielded on average 8.91% more per year over the past decade (13.97% vs. 5.06%). The expense ratio of IJR is 0.09 percentage points lower than IEF’s (0.06% vs. 0.15%).

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%.

IEF - Holdings

IEF 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%

IEF’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 IEF
Mean Return 1.21 0.32
R-squared 76.03 77.56
Std. Deviation 18.68 5.42
Alpha -3.7 -1.2
Beta 1.2 1.59
Sharpe Ratio 0.74 0.6
Treynor Ratio 10.77 1.97

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

The iShares 7-10 Year Treasury Bond ETF (IEF) has a Alpha of -1.2 with a Mean Return of 0.32 and a Sharpe Ratio of 0.6. Its Treynor Ratio is 1.97 while IEF’s Standard Deviation is 5.42. Furthermore, the fund has a R-squared of 77.56 and a Beta of 1.59.

IJR’s Mean Return is 0.89 points higher than that of IEF and its R-squared is 1.53 points lower. With a Standard Deviation of 18.68, IJR is slightly more volatile than IEF. The Alpha and Beta of IJR are 2.50 points lower and 0.39 points lower than IEF’s Alpha and Beta.

Performance

Annual Returns

IJR vs. IEF - Annual Returns

Year IJR IEF
2020 11.24% 9.84%
2019 22.79% 8.38%
2018 -8.43% 0.82%
2017 13.2% 2.47%
2016 26.49% 1.0%
2015 -2.0% 1.55%
2014 5.67% 8.92%
2013 41.36% -6.12%
2012 16.28% 4.06%
2011 0.9% 15.46%
2010 26.14% 9.29%

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 2011 was the strongest year for IEF, returning 15.46% on an annual basis. The poorest year for IEF in the last ten years was 2013, with a yield of -6.12%. Most years the iShares 7-10 Year Treasury Bond ETF has given investors modest returns, such as in 2017, 2012, and 2019, when gains were 2.47%, 4.06%, and 8.38% respectively.

Portfolio Growth

IJR vs. IEF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IJR $10,000 $38,800 13.97%
IEF $10,000 $16,936 5.06%

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 IEF, the end total would have been $16,936. This equates to a $6,936 profit over 11 years and a compound annual growth rate (CAGR) of 5.06%.

IJR’s CAGR is 8.91 percentage points higher than that of IEF and as a result, would have yielded $21,864 more on a $10,000 investment. Thus, IJR outperformed IEF by 8.91% annually.


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