IJR vs. IGSB: What’s The Difference?

The iShares Core S&P Small-Cap ETF (IJR) and the iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and IGSB is a iShares Short-Term Bond fund. So, what’s the difference between IJR and IGSB? And which fund is better?

IJR and IGSB have the same expense ratio: 0.06%. IJR also has a high exposure to the industrials sector while IGSB is mostly comprised of BBB bonds. Overall, IJR has provided higher returns than IGSB over the past ten years.

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

Summary

IJR IGSB
Name iShares Core S&P Small-Cap ETF iShares 1-5 Year Investment Grade Corporate Bond ETF
Category Small Blend Short-Term Bond
Issuer iShares iShares
AUM 68.64B 26.63B
Avg. Return 13.97% 2.51%
Div. Yield 0.96% 2.02%
Expense Ratio 0.06% 0.06%

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 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%.

IJR’s dividend yield is 1.06% lower than that of IGSB (0.96% vs. 2.02%). Also, IJR yielded on average 11.46% more per year over the past decade (13.97% vs. 2.51%). IJR and IGSB have the same expense ratio: 0.06%.

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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%.

IGSB - Holdings

IGSB Bond Sectors Weight
BBB 50.48%
A 40.04%
AA 7.46%
AAA 2.21%
BB 0.09%
Below B 0.0%
B 0.0%
US Government 0.0%
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.

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Risk Analysis

IJR IGSB
Mean Return 1.21 0.19
R-squared 76.03 26.13
Std. Deviation 18.68 2
Alpha -3.7 0.69
Beta 1.2 0.34
Sharpe Ratio 0.74 0.82
Treynor Ratio 10.77 4.82

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

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Standard Deviation of 2 with a Treynor Ratio of 4.82 and a Alpha of 0.69. Its Sharpe Ratio is 0.82 while IGSB’s Beta is 0.34. Furthermore, the fund has a Mean Return of 0.19 and a R-squared of 26.13.

IJR’s Mean Return is 1.02 points higher than that of IGSB and its R-squared is 49.90 points higher. With a Standard Deviation of 18.68, IJR is slightly more volatile than IGSB. The Alpha and Beta of IJR are 4.39 points lower and 0.86 points higher than IGSB’s Alpha and Beta.

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Performance

Annual Returns

IJR vs. IGSB - Annual Returns

Year IJR IGSB
2020 11.24% 5.26%
2019 22.79% 7.01%
2018 -8.43% 1.34%
2017 13.2% 1.41%
2016 26.49% 1.77%
2015 -2.0% 0.7%
2014 5.67% 0.74%
2013 41.36% 1.03%
2012 16.28% 3.28%
2011 0.9% 1.34%
2010 26.14% 3.69%

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 IGSB, returning 7.01% on an annual basis. The poorest year for IGSB in the last ten years was 2015, with a yield of 0.7%. Most years the iShares 1-5 Year Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2011, 2017, and 2016, when gains were 1.34%, 1.41%, and 1.77% respectively.

Portfolio Growth

IJR vs. IGSB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IJR $10,000 $38,800 13.97%
IGSB $10,000 $13,103 2.51%

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 IGSB, the end total would have been $13,103. This equates to a $3,103 profit over 11 years and a compound annual growth rate (CAGR) of 2.51%.

IJR’s CAGR is 11.46 percentage points higher than that of IGSB and as a result, would have yielded $25,697 more on a $10,000 investment. Thus, IJR outperformed IGSB by 11.46% annually.


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