IJR vs. VTIP: What’s The Difference?

The iShares Core S&P Small-Cap ETF (IJR) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between IJR and VTIP? And which fund is better?

The expense ratio of IJR is 0.01 percentage points higher than VTIP’s (0.06% vs. 0.05%). IJR also has a high exposure to the industrials sector while VTIP is mostly comprised of AAA bonds. Overall, IJR has provided higher returns than VTIP over the past ten years.

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

Summary

IJR VTIP
Name iShares Core S&P Small-Cap ETF Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares
Category Small Blend Inflation-Protected Bond
Issuer iShares Vanguard
AUM 68.64B 50.67B
Avg. Return 13.97% 1.79%
Div. Yield 0.96% 1.35%
Expense Ratio 0.06% 0.05%

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 Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.

IJR’s dividend yield is 0.39% lower than that of VTIP (0.96% vs. 1.35%). Also, IJR yielded on average 12.17% more per year over the past decade (13.97% vs. 1.79%). The expense ratio of IJR is 0.01 percentage points higher than VTIP’s (0.06% vs. 0.05%).

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%.

VTIP - Holdings

VTIP Bond Sectors Weight
AAA 99.87%
Others 0.13%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 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 VTIP
Mean Return 1.21 0
R-squared 76.03 0
Std. Deviation 18.68 0
Alpha -3.7 0
Beta 1.2 0
Sharpe Ratio 0.74 0
Treynor Ratio 10.77 0

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

The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Standard Deviation of 0 with a Mean Return of 0 and a Treynor Ratio of 0. Its Sharpe Ratio is 0 while VTIP’s Alpha is 0. Furthermore, the fund has a R-squared of 0 and a Beta of 0.

IJR’s Mean Return is 1.21 points higher than that of VTIP and its R-squared is 76.03 points higher. With a Standard Deviation of 18.68, IJR is slightly more volatile than VTIP. The Alpha and Beta of IJR are 3.70 points lower and 1.20 points higher than VTIP’s Alpha and Beta.

Performance

Annual Returns

IJR vs. VTIP - Annual Returns

Year IJR VTIP
2020 11.24% 4.97%
2019 22.79% 4.83%
2018 -8.43% 0.54%
2017 13.2% 0.82%
2016 26.49% 2.71%
2015 -2.0% -0.15%
2014 5.67% -1.17%
2013 41.36% -1.55%
2012 16.28% 0.0%
2011 0.9% 0.0%
2010 26.14% 0.0%

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 2020 was the strongest year for VTIP, returning 4.97% on an annual basis. The poorest year for VTIP in the last ten years was 2013, with a yield of -1.55%. Most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 0.54% respectively.

Portfolio Growth

IJR vs. VTIP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IJR $10,000 $18,546 13.97%
VTIP $10,000 $11,305 1.79%

A $10,000 investment in IJR would have resulted in a final balance of $18,546. This is a profit of $8,546 over 7 years and amounts to a compound annual growth rate (CAGR) of 13.97%.

With a $10,000 investment in VTIP, the end total would have been $11,305. This equates to a $1,305 profit over 7 years and a compound annual growth rate (CAGR) of 1.79%.

IJR’s CAGR is 12.17 percentage points higher than that of VTIP and as a result, would have yielded $7,241 more on a $10,000 investment. Thus, IJR outperformed VTIP by 12.17% annually.


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