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.

Summary

IJR PFF
Name iShares Core S&P Small-Cap ETF iShares Preferred and Income Securities ETF
Category Small Blend Preferred Stock
Issuer iShares iShares
AUM 68.64B 19.8B
Avg. Return 13.97% 6.90%
Div. Yield 0.96% 4.47%
Expense Ratio 0.06% 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%).

Fund Composition

Industry Exposure

IJR vs. PFF - Industry Exposure

IJR PFF
Technology 14.32% 0.0%
Industrials 17.31% 10.27%
Energy 4.0% 0.0%
Communication Services 2.59% 0.0%
Utilities 1.8% 81.81%
Healthcare 11.55% 3.54%
Consumer Defensive 4.01% 0.0%
Real Estate 9.55% 0.65%
Financial Services 15.91% 0.0%
Consumer Cyclical 13.61% 0.0%
Basic Materials 5.34% 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 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%.

PFF - Holdings

PFF Holdings Weight
Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A 2.54%
BlackRock Cash Funds Treasury SL Agency 2.3%
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 A 1.35%
Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B 1.14%
NextEra Energy Inc Unit 1.12%
Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 1.08%
Avantor Inc Ser A 0.99%

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%.

Risk Analysis

IJR PFF
Mean Return 1.21 0.52
R-squared 76.03 9.39
Std. Deviation 18.68 7.87
Alpha -3.7 3.45
Beta 1.2 0.81
Sharpe Ratio 0.74 0.72
Treynor Ratio 10.77 6.79

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.

Performance

Annual Returns

IJR vs. PFF - Annual Returns

Year IJR PFF
2020 11.24% 7.94%
2019 22.79% 15.62%
2018 -8.43% -4.77%
2017 13.2% 8.33%
2016 26.49% 1.26%
2015 -2.0% 4.62%
2014 5.67% 13.45%
2013 41.36% -0.59%
2012 16.28% 18.25%
2011 0.9% -2.2%
2010 26.14% 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

Fund Initial Balance Final Balance CAGR
IJR $10,000 $38,800 13.97%
PFF $10,000 $20,272 6.90%

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.


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