The iShares S&P 500 Value ETF (IVE) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) are both among the Top 100 ETFs. IVE is a iShares Large Value fund and HYG is a iShares High Yield Bond fund. So, what’s the difference between IVE and HYG? And which fund is better?
The expense ratio of IVE is 0.30 percentage points lower than HYG’s (0.18% vs. 0.48%). IVE also has a high exposure to the financial services sector while HYG is mostly comprised of BB bonds. Overall, IVE has provided higher returns than HYG over the past 11 years.
In this article, we’ll compare IVE vs. HYG. We’ll look at portfolio growth and fund composition, as well as at their annual returns and performance. Moreover, I’ll also discuss IVE’s and HYG’s industry exposure, holdings, and risk metrics and examine how these affect their overall returns.
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Summary
| IVE | HYG | |
| Name | iShares S&P 500 Value ETF | iShares iBoxx $ High Yield Corporate Bond ETF |
| Category | Large Value | High Yield Bond |
| Issuer | iShares | iShares |
| AUM | 22.4B | 20.03B |
| Avg. Return | 11.68% | 6.42% |
| Div. Yield | 1.88% | 4.44% |
| Expense Ratio | 0.18% | 0.48% |
The iShares S&P 500 Value ETF (IVE) is a Large Value fund that is issued by iShares. It currently has 22.4B total assets under management and has yielded an average annual return of 11.68% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.18%.
The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) is a High Yield Bond fund that is issued by iShares. It currently has 20.03B total assets under management and has yielded an average annual return of 6.42% over the past 10 years. The fund has a dividend yield of 4.44% with an expense ratio of 0.48%.
IVE’s dividend yield is 2.56% lower than that of HYG (1.88% vs. 4.44%). Also, IVE yielded on average 5.27% more per year over the past decade (11.68% vs. 6.42%). The expense ratio of IVE is 0.30 percentage points lower than HYG’s (0.18% vs. 0.48%).
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Fund Composition
Holdings
| IVE Holdings | Weight |
| Berkshire Hathaway Inc Class B | 3.05% |
| JPMorgan Chase & Co | 2.65% |
| The Walt Disney Co | 1.85% |
| Bank of America Corp | 1.67% |
| Johnson & Johnson | 1.57% |
| Exxon Mobil Corp | 1.41% |
| Pfizer Inc | 1.38% |
| Cisco Systems Inc | 1.35% |
| Verizon Communications Inc | 1.33% |
| Intel Corp | 1.25% |
IVE’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, The Walt Disney Co, Bank of America Corp, and Johnson & Johnson at 3.05%, 2.65%, 1.85%, 1.67%, and 1.57%.
Exxon Mobil Corp (1.41%), Pfizer Inc (1.38%), and Cisco Systems Inc (1.35%) have a slightly smaller but still significant weight. Verizon Communications Inc and Intel Corp are also represented in the IVE’s holdings at 1.33% and 1.25%.
| HYG Bond Sectors | Weight |
| BB | 56.53% |
| B | 31.27% |
| Below B | 11.4% |
| BBB | 0.61% |
| AAA | 0.28% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
| Others | -0.09% |
HYG’s Top Bond Sectors are ratings of BB, B, Below B, BBB, and AAA at 56.53%, 31.27%, 11.4%, 0.61%, and 0.28%. The fund is less weighted towards A (0.0%), AA (0.0%), and US Government (0.0%) rated bonds.
Risk Analysis
| IVE | HYG | |
| Mean Return | 1.05 | 0.46 |
| R-squared | 92.08 | 4.1 |
| Std. Deviation | 14.3 | 6.96 |
| Alpha | -2.9 | 3.58 |
| Beta | 1.01 | 0.48 |
| Sharpe Ratio | 0.83 | 0.7 |
| Treynor Ratio | 11.41 | 10.01 |
The iShares S&P 500 Value ETF (IVE) has a Beta of 1.01 with a Standard Deviation of 14.3 and a R-squared of 92.08. Its Alpha is -2.9 while IVE’s Sharpe Ratio is 0.83. Furthermore, the fund has a Treynor Ratio of 11.41 and a Mean Return of 1.05.
The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) has a R-squared of 4.1 with a Treynor Ratio of 10.01 and a Beta of 0.48. Its Alpha is 3.58 while HYG’s Sharpe Ratio is 0.7. Furthermore, the fund has a Standard Deviation of 6.96 and a Mean Return of 0.46.
IVE’s Mean Return is 0.59 points higher than that of HYG and its R-squared is 87.98 points higher. With a Standard Deviation of 14.3, IVE is slightly more volatile than HYG. The Alpha and Beta of IVE are 6.48 points lower and 0.53 points higher than HYG’s Alpha and Beta.
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Performance
Annual Returns
| Year | IVE | HYG |
| 2020 | 1.24% | 4.12% |
| 2019 | 31.71% | 14.23% |
| 2018 | -9.09% | -1.93% |
| 2017 | 15.19% | 6.09% |
| 2016 | 17.17% | 13.92% |
| 2015 | -3.24% | -5.55% |
| 2014 | 12.14% | 2.0% |
| 2013 | 31.69% | 5.9% |
| 2012 | 17.45% | 13.83% |
| 2011 | -0.63% | 5.89% |
| 2010 | 14.9% | 12.07% |
IVE had its best year in 2019 with an annual return of 31.71%. IVE’s worst year over the past decade yielded -9.09% and occurred in 2018. In most years the iShares S&P 500 Value ETF provided moderate returns such as in 2014, 2010, and 2017 where annual returns amounted to 12.14%, 14.9%, and 15.19% respectively.
The year 2019 was the strongest year for HYG, returning 14.23% on an annual basis. The poorest year for HYG in the last ten years was 2015, with a yield of -5.55%. Most years the iShares iBoxx $ High Yield Corporate Bond ETF has given investors modest returns, such as in 2011, 2013, and 2017, when gains were 5.89%, 5.9%, and 6.09% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IVE | $10,000 | $31,350 | 11.68% |
| HYG | $10,000 | $19,427 | 6.42% |
A $10,000 investment in IVE would have resulted in a final balance of $31,350. This is a profit of $21,350 over 11 years and amounts to a compound annual growth rate (CAGR) of 11.68%.
With a $10,000 investment in HYG, the end total would have been $19,427. This equates to a $9,427 profit over 11 years and a compound annual growth rate (CAGR) of 6.42%.
IVE’s CAGR is 5.27 percentage points higher than that of HYG and as a result, would have yielded $11,923 more on a $10,000 investment. Thus, IVE outperformed HYG by 5.27% annually.
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