IJR vs. SHY: What’s The Difference?

The iShares Core S&P Small-Cap ETF (IJR) and the iShares 1-3 Year Treasury Bond ETF (SHY) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and SHY is a iShares Short Government fund. So, what’s the difference between IJR and SHY? And which fund is better?

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

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

Summary

IJR SHY
Name iShares Core S&P Small-Cap ETF iShares 1-3 Year Treasury Bond ETF
Category Small Blend Short Government
Issuer iShares iShares
AUM 68.64B 19.51B
Avg. Return 13.97% 1.27%
Div. Yield 0.96% 0.46%
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 1-3 Year Treasury Bond ETF (SHY) is a Short Government fund that is issued by iShares. It currently has 19.51B total assets under management and has yielded an average annual return of 1.27% over the past 10 years. The fund has a dividend yield of 0.46% with an expense ratio of 0.15%.

IJR’s dividend yield is 0.50% higher than that of SHY (0.96% vs. 0.46%). Also, IJR yielded on average 12.69% more per year over the past decade (13.97% vs. 1.27%). The expense ratio of IJR is 0.09 percentage points lower than SHY’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%.

SHY - Holdings

SHY Bond Sectors Weight
AAA 99.67%
Others 0.33%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

SHY’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.67%, 0.33%, 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 SHY
Mean Return 1.21 0.09
R-squared 76.03 39.11
Std. Deviation 18.68 0.89
Alpha -3.7 -0.03
Beta 1.2 0.18
Sharpe Ratio 0.74 0.54
Treynor Ratio 10.77 2.6

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

The iShares 1-3 Year Treasury Bond ETF (SHY) has a Standard Deviation of 0.89 with a Alpha of -0.03 and a Beta of 0.18. Its R-squared is 39.11 while SHY’s Sharpe Ratio is 0.54. Furthermore, the fund has a Mean Return of 0.09 and a Treynor Ratio of 2.6.

IJR’s Mean Return is 1.12 points higher than that of SHY and its R-squared is 36.92 points higher. With a Standard Deviation of 18.68, IJR is slightly more volatile than SHY. The Alpha and Beta of IJR are 3.67 points lower and 1.02 points higher than SHY’s Alpha and Beta.

Performance

Annual Returns

IJR vs. SHY - Annual Returns

Year IJR SHY
2020 11.24% 3.01%
2019 22.79% 3.42%
2018 -8.43% 1.45%
2017 13.2% 0.27%
2016 26.49% 0.75%
2015 -2.0% 0.43%
2014 5.67% 0.48%
2013 41.36% 0.23%
2012 16.28% 0.31%
2011 0.9% 1.43%
2010 26.14% 2.23%

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 SHY, returning 3.42% on an annual basis. The poorest year for SHY in the last ten years was 2013, with a yield of 0.23%. Most years the iShares 1-3 Year Treasury Bond ETF has given investors modest returns, such as in 2014, 2016, and 2011, when gains were 0.48%, 0.75%, and 1.43% respectively.

Portfolio Growth

IJR vs. SHY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IJR $10,000 $38,800 13.97%
SHY $10,000 $11,486 1.27%

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 SHY, the end total would have been $11,486. This equates to a $1,486 profit over 11 years and a compound annual growth rate (CAGR) of 1.27%.

IJR’s CAGR is 12.69 percentage points higher than that of SHY and as a result, would have yielded $27,314 more on a $10,000 investment. Thus, IJR outperformed SHY by 12.69% annually.


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