The iShares Core Total USD Bond Market ETF (IUSB) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. IUSB is a iShares N/A fund and TLT is a iShares Long Government fund. So, what’s the difference between IUSB and TLT? And which fund is better?
The expense ratio of IUSB is 0.09 percentage points lower than TLT’s (0.06% vs. 0.15%). IUSB is mostly comprised of AAA bonds and TLT has a high exposure to AAA bond. Overall, IUSB has provided lower returns than TLT over the past 6 years.
In this article, we’ll compare IUSB vs. TLT. We’ll look at holdings and industry exposure, as well as at their fund composition and portfolio growth. Moreover, I’ll also discuss IUSB’s and TLT’s annual returns, risk metrics, and performance and examine how these affect their overall returns.
Summary
| IUSB | TLT | |
| Name | iShares Core Total USD Bond Market ETF | iShares 20+ Year Treasury Bond ETF |
| Category | N/A | Long Government |
| Issuer | iShares | iShares |
| AUM | 14.49B | 15.15B |
| Avg. Return | 4.13% | 9.00% |
| Div. Yield | 2.1% | 1.5% |
| Expense Ratio | 0.06% | 0.15% |
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 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%.
IUSB’s dividend yield is 0.60% higher than that of TLT (2.1% vs. 1.5%). Also, IUSB yielded on average 4.87% less per year over the past decade (4.13% vs. 9.00%). The expense ratio of IUSB is 0.09 percentage points lower than TLT’s (0.06% vs. 0.15%).
Fund Composition
Holdings
| IUSB Bond Sectors | Weight |
| AAA | 58.32% |
| BBB | 16.98% |
| A | 12.27% |
| BB | 4.33% |
| AA | 3.36% |
| B | 2.8% |
| Others | 1.01% |
| Below B | 0.92% |
| US Government | 0.0% |
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.
| 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
| IUSB | TLT | |
| Mean Return | 0 | 0.63 |
| R-squared | 0 | 68.76 |
| Std. Deviation | 0 | 12.76 |
| Alpha | 0 | -2.83 |
| Beta | 0 | 3.54 |
| Sharpe Ratio | 0 | 0.55 |
| Treynor Ratio | 0 | 1.82 |
The iShares Core Total USD Bond Market ETF (IUSB) has a Sharpe Ratio of 0 with a R-squared of 0 and a Mean Return of 0. Its Beta is 0 while IUSB’s Standard Deviation is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Alpha of 0.
The iShares 20+ Year Treasury Bond ETF (TLT) has a Standard Deviation of 12.76 with a R-squared of 68.76 and a Alpha of -2.83. Its Mean Return is 0.63 while TLT’s Treynor Ratio is 1.82. Furthermore, the fund has a Sharpe Ratio of 0.55 and a Beta of 3.54.
IUSB’s Mean Return is 0.63 points lower than that of TLT and its R-squared is 68.76 points lower. With a Standard Deviation of 0, IUSB is slightly less volatile than TLT. The Alpha and Beta of IUSB are 2.83 points higher and 3.54 points lower than TLT’s Alpha and Beta.
Performance
Annual Returns
| Year | IUSB | TLT |
| 2020 | 7.59% | 17.92% |
| 2019 | 9.26% | 14.93% |
| 2018 | -0.38% | -2.07% |
| 2017 | 4.06% | 8.92% |
| 2016 | 3.78% | 1.36% |
| 2015 | 0.46% | -1.65% |
| 2014 | 0.0% | 27.35% |
| 2013 | 0.0% | -13.91% |
| 2012 | 0.0% | 3.25% |
| 2011 | 0.0% | 33.6% |
| 2010 | 0.0% | 9.25% |
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 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
| Fund | Initial Balance | Final Balance | CAGR |
| IUSB | $10,000 | $12,704 | 4.13% |
| TLT | $10,000 | $14,410 | 9.00% |
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 TLT, the end total would have been $14,410. This equates to a $4,410 profit over 6 years and a compound annual growth rate (CAGR) of 9.00%.
IUSB’s CAGR is 4.87 percentage points lower than that of TLT and as a result, would have yielded $1,706 less on a $10,000 investment. Thus, IUSB performed worse than TLT by 4.87% annually.
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