The iShares Core S&P Small-Cap ETF (IJR) and the iShares TIPS Bond ETF (TIP) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and TIP is a iShares Inflation-Protected Bond fund. So, what’s the difference between IJR and TIP? And which fund is better?
The expense ratio of IJR is 0.13 percentage points lower than TIP’s (0.06% vs. 0.19%). IJR also has a high exposure to the industrials sector while TIP is mostly comprised of AAA bonds. Overall, IJR has provided higher returns than TIP over the past ten years.
In this article, we’ll compare IJR vs. TIP. We’ll look at portfolio growth and holdings, as well as at their industry exposure and performance. Moreover, I’ll also discuss IJR’s and TIP’s risk metrics, fund composition, and annual returns and examine how these affect their overall returns.
Summary
| IJR | TIP | |
| Name | iShares Core S&P Small-Cap ETF | iShares TIPS Bond ETF |
| Category | Small Blend | Inflation-Protected Bond |
| Issuer | iShares | iShares |
| AUM | 68.64B | 28.3B |
| Avg. Return | 13.97% | 4.07% |
| Div. Yield | 0.96% | 1.87% |
| Expense Ratio | 0.06% | 0.19% |
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 TIPS Bond ETF (TIP) is a Inflation-Protected Bond fund that is issued by iShares. It currently has 28.3B total assets under management and has yielded an average annual return of 4.07% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.19%.
IJR’s dividend yield is 0.91% lower than that of TIP (0.96% vs. 1.87%). Also, IJR yielded on average 9.90% more per year over the past decade (13.97% vs. 4.07%). The expense ratio of IJR is 0.13 percentage points lower than TIP’s (0.06% vs. 0.19%).
Fund Composition
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%.
| TIP Bond Sectors | Weight |
| AAA | 99.31% |
| Others | 0.69% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
TIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.31%, 0.69%, 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 | TIP | |
| Mean Return | 1.21 | 0.28 |
| R-squared | 76.03 | 66.57 |
| Std. Deviation | 18.68 | 4.33 |
| Alpha | -3.7 | -0.58 |
| Beta | 1.2 | 1.18 |
| Sharpe Ratio | 0.74 | 0.62 |
| Treynor Ratio | 10.77 | 2.24 |
The iShares Core S&P Small-Cap ETF (IJR) has a Beta of 1.2 with a Sharpe Ratio of 0.74 and a Alpha of -3.7. Its Standard Deviation is 18.68 while IJR’s R-squared is 76.03. Furthermore, the fund has a Treynor Ratio of 10.77 and a Mean Return of 1.21.
The iShares TIPS Bond ETF (TIP) has a Beta of 1.18 with a Treynor Ratio of 2.24 and a Mean Return of 0.28. Its Alpha is -0.58 while TIP’s R-squared is 66.57. Furthermore, the fund has a Sharpe Ratio of 0.62 and a Standard Deviation of 4.33.
IJR’s Mean Return is 0.93 points higher than that of TIP and its R-squared is 9.46 points higher. With a Standard Deviation of 18.68, IJR is slightly more volatile than TIP. The Alpha and Beta of IJR are 3.12 points lower and 0.02 points higher than TIP’s Alpha and Beta.
Performance
Annual Returns
| Year | IJR | TIP |
| 2020 | 11.24% | 10.91% |
| 2019 | 22.79% | 8.28% |
| 2018 | -8.43% | -1.43% |
| 2017 | 13.2% | 2.92% |
| 2016 | 26.49% | 4.56% |
| 2015 | -2.0% | -1.59% |
| 2014 | 5.67% | 3.49% |
| 2013 | 41.36% | -8.65% |
| 2012 | 16.28% | 6.8% |
| 2011 | 0.9% | 13.4% |
| 2010 | 26.14% | 6.1% |
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 TIP, returning 13.4% on an annual basis. The poorest year for TIP in the last ten years was 2013, with a yield of -8.65%. Most years the iShares TIPS Bond ETF has given investors modest returns, such as in 2014, 2016, and 2010, when gains were 3.49%, 4.56%, and 6.1% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IJR | $10,000 | $38,800 | 13.97% |
| TIP | $10,000 | $15,229 | 4.07% |
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 TIP, the end total would have been $15,229. This equates to a $5,229 profit over 11 years and a compound annual growth rate (CAGR) of 4.07%.
IJR’s CAGR is 9.90 percentage points higher than that of TIP and as a result, would have yielded $23,571 more on a $10,000 investment. Thus, IJR outperformed TIP by 9.90% annually.
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