Skip to content

IJR vs. PFF: What’s The Difference?

The iShares Core S&P Small-Cap ETF (IJR) and the iShares Preferred and Income Securities ETF (PFF) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and PFF is a iShares Preferred Stock fund. So, what’s the difference between IJR and PFF? And which fund is better?

The expense ratio of IJR is 0.40 percentage points lower than PFF’s (0.06% vs. 0.46%). IJR also has a higher exposure to the industrials sector and a higher standard deviation. Overall, IJR has provided higher returns than PFF over the past ten years.

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

Introduction To Mutual Funds
Introduction To Mutual Funds
TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

IJRPFF
NameiShares Core S&P Small-Cap ETFiShares Preferred and Income Securities ETF
CategorySmall BlendPreferred Stock
IssueriSharesiShares
AUM68.64B19.8B
Avg. Return13.97%6.90%
Div. Yield0.96%4.47%
Expense Ratio0.06%0.46%

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 Preferred and Income Securities ETF (PFF) is a Preferred Stock fund that is issued by iShares. It currently has 19.8B total assets under management and has yielded an average annual return of 6.90% over the past 10 years. The fund has a dividend yield of 4.47% with an expense ratio of 0.46%.

IJR’s dividend yield is 3.51% lower than that of PFF (0.96% vs. 4.47%). Also, IJR yielded on average 7.07% more per year over the past decade (13.97% vs. 6.90%). The expense ratio of IJR is 0.40 percentage points lower than PFF’s (0.06% vs. 0.46%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

IJR vs. PFF - Industry Exposure

IJRPFF
Technology14.32%0.0%
Industrials17.31%10.27%
Energy4.0%0.0%
Communication Services2.59%0.0%
Utilities1.8%81.81%
Healthcare11.55%3.54%
Consumer Defensive4.01%0.0%
Real Estate9.55%0.65%
Financial Services15.91%0.0%
Consumer Cyclical13.61%0.0%
Basic Materials5.34%3.74%

The iShares Core S&P Small-Cap ETF (IJR) has the most exposure to the Industrials sector at 17.31%. This is followed by Financial Services and Technology at 15.91% and 14.32% respectively. Communication Services (2.59%), Energy (4.0%), and Consumer Defensive (4.01%) only make up 10.60% of the fund’s total assets.

IJR’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Consumer Cyclical, and Technology stocks at 5.34%, 9.55%, 11.55%, 13.61%, and 14.32%.

The iShares Preferred and Income Securities ETF (PFF) has the most exposure to the Utilities sector at 81.81%. This is followed by Industrials and Basic Materials at 10.27% and 3.74% respectively. Financial Services (0.0%), Consumer Defensive (0.0%), and Communication Services (0.0%) only make up 0.00% of the fund’s total assets.

PFF’s mid-section with moderate exposure is comprised of Energy, Technology, Real Estate, Healthcare, and Basic Materials stocks at 0.0%, 0.0%, 0.65%, 3.54%, and 3.74%.

IJR is 7.04% more exposed to the Industrials sector than PFF (17.31% vs 10.27%). IJR’s exposure to Financial Services and Technology stocks is 15.91% higher and 14.32% higher respectively (15.91% vs. 0.0% and 14.32% vs. 0.0%). In total, Communication Services, Energy, and Consumer Defensive also make up 10.60% more of the fund’s holdings compared to PFF (10.60% vs. 0.00%).

Holdings

IJR - Holdings

IJR HoldingsWeight
BlackRock Cash Funds Treasury SL Agency1.08%
GameStop Corp Class A0.86%
Omnicell Inc0.61%
Stamps.com Inc0.58%
Saia Inc0.57%
Power Integrations Inc0.57%
Exponent Inc0.54%
NeoGenomics Inc0.53%
Chart Industries Inc0.53%
Macy’s Inc0.51%

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%.

PFF - Holdings

PFF HoldingsWeight
Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A2.54%
BlackRock Cash Funds Treasury SL Agency2.3%
Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-1.79%
Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-1.49%
ArcelorMittal S.A. 5.5%1.36%
Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A1.35%
Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B1.14%
NextEra Energy Inc Unit1.12%
Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.41.08%
Avantor Inc Ser A0.99%

PFF’s Top Holdings are Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A, BlackRock Cash Funds Treasury SL Agency, Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-, Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-, and ArcelorMittal S.A. 5.5% at 2.54%, 2.3%, 1.79%, 1.49%, and 1.36%.

Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A (1.35%), Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B (1.14%), and NextEra Energy Inc Unit (1.12%) have a slightly smaller but still significant weight. Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 and Avantor Inc Ser A are also represented in the PFF’s holdings at 1.08% and 0.99%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

IJRPFF
Mean Return1.210.52
R-squared76.039.39
Std. Deviation18.687.87
Alpha-3.73.45
Beta1.20.81
Sharpe Ratio0.740.72
Treynor Ratio10.776.79

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

The iShares Preferred and Income Securities ETF (PFF) has a Beta of 0.81 with a Mean Return of 0.52 and a Treynor Ratio of 6.79. Its Standard Deviation is 7.87 while PFF’s Sharpe Ratio is 0.72. Furthermore, the fund has a Alpha of 3.45 and a R-squared of 9.39.

IJR’s Mean Return is 0.69 points higher than that of PFF and its R-squared is 66.64 points higher. With a Standard Deviation of 18.68, IJR is slightly more volatile than PFF. The Alpha and Beta of IJR are 7.15 points lower and 0.39 points higher than PFF’s Alpha and Beta.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

IJR vs. PFF - Annual Returns

YearIJRPFF
202011.24%7.94%
201922.79%15.62%
2018-8.43%-4.77%
201713.2%8.33%
201626.49%1.26%
2015-2.0%4.62%
20145.67%13.45%
201341.36%-0.59%
201216.28%18.25%
20110.9%-2.2%
201026.14%13.96%

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 2012 was the strongest year for PFF, returning 18.25% on an annual basis. The poorest year for PFF in the last ten years was 2018, with a yield of -4.77%. Most years the iShares Preferred and Income Securities ETF has given investors modest returns, such as in 2015, 2020, and 2017, when gains were 4.62%, 7.94%, and 8.33% respectively.

Portfolio Growth

IJR vs. PFF - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IJR$10,000$38,80013.97%
PFF$10,000$20,2726.90%

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 PFF, the end total would have been $20,272. This equates to a $10,272 profit over 11 years and a compound annual growth rate (CAGR) of 6.90%.

IJR’s CAGR is 7.07 percentage points higher than that of PFF and as a result, would have yielded $18,528 more on a $10,000 investment. Thus, IJR outperformed PFF by 7.07% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply

Your email address will not be published.