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IUSB vs. GOVT: What’s The Difference?

The iShares Core Total USD Bond Market ETF (IUSB) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. IUSB is a iShares N/A fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between IUSB and GOVT? And which fund is better?

The expense ratio of IUSB is 0.01 percentage points higher than GOVT’s (0.06% vs. 0.05%). IUSB is mostly comprised of AAA bonds and GOVT has a high exposure to AAA bond. Overall, IUSB has provided higher returns than GOVT over the past 6 years.

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

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Summary

IUSBGOVT
NameiShares Core Total USD Bond Market ETFiShares U.S. Treasury Bond ETF
CategoryN/AIntermediate Government
IssueriSharesiShares
AUM14.49B17.07B
Avg. Return4.13%2.67%
Div. Yield2.1%1.0%
Expense Ratio0.06%0.05%

The iShares Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.

The iShares U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.

IUSB’s dividend yield is 1.10% higher than that of GOVT (2.1% vs. 1.0%). Also, IUSB yielded on average 1.45% more per year over the past decade (4.13% vs. 2.67%). The expense ratio of IUSB is 0.01 percentage points higher than GOVT’s (0.06% vs. 0.05%).

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Fund Composition

Holdings

IUSB - Holdings

IUSB Bond SectorsWeight
AAA58.32%
BBB16.98%
A12.27%
BB4.33%
AA3.36%
B2.8%
Others1.01%
Below B0.92%
US Government0.0%

IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.

GOVT - Holdings

GOVT Bond SectorsWeight
AAA100.0%
Others0.0%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

GOVT’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.

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Risk Analysis

IUSBGOVT
Mean Return00
R-squared00
Std. Deviation00
Alpha00
Beta00
Sharpe Ratio00
Treynor Ratio00

The iShares Core Total USD Bond Market ETF (IUSB) has a Standard Deviation of 0 with a Alpha of 0 and a Treynor Ratio of 0. Its Sharpe Ratio is 0 while IUSB’s R-squared is 0. Furthermore, the fund has a Mean Return of 0 and a Beta of 0.

The iShares U.S. Treasury Bond ETF (GOVT) has a Treynor Ratio of 0 with a Beta of 0 and a R-squared of 0. Its Alpha is 0 while GOVT’s Standard Deviation is 0. Furthermore, the fund has a Mean Return of 0 and a Sharpe Ratio of 0.

IUSB’s Mean Return is 0.00 points lower than that of GOVT and its R-squared is 0.00 points lower. With a Standard Deviation of 0, IUSB is slightly less volatile than GOVT. The Alpha and Beta of IUSB are 0.00 points lower and 0.00 points lower than GOVT’s Alpha and Beta.

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Performance

Annual Returns

IUSB vs. GOVT - Annual Returns

YearIUSBGOVT
20207.59%7.92%
20199.26%6.71%
2018-0.38%0.74%
20174.06%2.19%
20163.78%0.92%
20150.46%0.76%
20140.0%4.99%
20130.0%-2.84%
20120.0%0.0%
20110.0%0.0%
20100.0%0.0%

IUSB had its best year in 2019 with an annual return of 9.26%. IUSB’s worst year over the past decade yielded -0.38% and occurred in 2018. In most years the iShares Core Total USD Bond Market ETF provided moderate returns such as in 2011, 2010, and 2015 where annual returns amounted to 0.0%, 0.0%, and 0.46% respectively.

The year 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.

Portfolio Growth

IUSB vs. GOVT - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IUSB$10,000$12,7044.13%
GOVT$10,000$12,0552.67%

A $10,000 investment in IUSB would have resulted in a final balance of $12,704. This is a profit of $2,704 over 6 years and amounts to a compound annual growth rate (CAGR) of 4.13%.

With a $10,000 investment in GOVT, the end total would have been $12,055. This equates to a $2,055 profit over 6 years and a compound annual growth rate (CAGR) of 2.67%.

IUSB’s CAGR is 1.45 percentage points higher than that of GOVT and as a result, would have yielded $649 more on a $10,000 investment. Thus, IUSB outperformed GOVT by 1.45% annually.


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