IJR vs. TLT: What’s The Difference?

The iShares Core S&P Small-Cap ETF (IJR) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and TLT is a iShares Long Government fund. So, what’s the difference between IJR and TLT? And which fund is better?

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

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

Summary

IJR TLT
Name iShares Core S&P Small-Cap ETF iShares 20+ Year Treasury Bond ETF
Category Small Blend Long Government
Issuer iShares iShares
AUM 68.64B 15.15B
Avg. Return 13.97% 9.00%
Div. Yield 0.96% 1.5%
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 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.

IJR’s dividend yield is 0.54% lower than that of TLT (0.96% vs. 1.5%). Also, IJR yielded on average 4.97% more per year over the past decade (13.97% vs. 9.00%). The expense ratio of IJR is 0.09 percentage points lower than TLT’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%.

TLT - Holdings

TLT Bond Sectors Weight
AAA 100.0%
Others 0.0%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

TLT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 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 TLT
Mean Return 1.21 0.63
R-squared 76.03 68.76
Std. Deviation 18.68 12.76
Alpha -3.7 -2.83
Beta 1.2 3.54
Sharpe Ratio 0.74 0.55
Treynor Ratio 10.77 1.82

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

The iShares 20+ Year Treasury Bond ETF (TLT) has a R-squared of 68.76 with a Standard Deviation of 12.76 and a Alpha of -2.83. Its Treynor Ratio is 1.82 while TLT’s Beta is 3.54. Furthermore, the fund has a Mean Return of 0.63 and a Sharpe Ratio of 0.55.

IJR’s Mean Return is 0.58 points higher than that of TLT and its R-squared is 7.27 points higher. With a Standard Deviation of 18.68, IJR is slightly more volatile than TLT. The Alpha and Beta of IJR are 0.87 points lower and 2.34 points lower than TLT’s Alpha and Beta.

Performance

Annual Returns

IJR vs. TLT - Annual Returns

Year IJR TLT
2020 11.24% 17.92%
2019 22.79% 14.93%
2018 -8.43% -2.07%
2017 13.2% 8.92%
2016 26.49% 1.36%
2015 -2.0% -1.65%
2014 5.67% 27.35%
2013 41.36% -13.91%
2012 16.28% 3.25%
2011 0.9% 33.6%
2010 26.14% 9.25%

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 TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% respectively.

Portfolio Growth

IJR vs. TLT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IJR $10,000 $38,800 13.97%
TLT $10,000 $23,809 9.00%

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 TLT, the end total would have been $23,809. This equates to a $13,809 profit over 11 years and a compound annual growth rate (CAGR) of 9.00%.

IJR’s CAGR is 4.97 percentage points higher than that of TLT and as a result, would have yielded $14,991 more on a $10,000 investment. Thus, IJR outperformed TLT by 4.97% annually.


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