IVE vs. IEF: What’s The Difference?

The iShares S&P 500 Value ETF (IVE) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. IVE is a iShares Large Value fund and IEF is a iShares Long Government fund. So, what’s the difference between IVE and IEF? And which fund is better?

The expense ratio of IVE is 0.03 percentage points higher than IEF’s (0.18% vs. 0.15%). IVE also has a high exposure to the financial services sector while IEF is mostly comprised of AAA bonds. Overall, IVE has provided higher returns than IEF over the past 11 years.

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

Summary

IVE IEF
Name iShares S&P 500 Value ETF iShares 7-10 Year Treasury Bond ETF
Category Large Value Long Government
Issuer iShares iShares
AUM 22.4B 13.44B
Avg. Return 11.68% 5.06%
Div. Yield 1.88% 0.84%
Expense Ratio 0.18% 0.15%

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 7-10 Year Treasury Bond ETF (IEF) is a Long Government fund that is issued by iShares. It currently has 13.44B total assets under management and has yielded an average annual return of 5.06% over the past 10 years. The fund has a dividend yield of 0.84% with an expense ratio of 0.15%.

IVE’s dividend yield is 1.04% higher than that of IEF (1.88% vs. 0.84%). Also, IVE yielded on average 6.62% more per year over the past decade (11.68% vs. 5.06%). The expense ratio of IVE is 0.03 percentage points higher than IEF’s (0.18% vs. 0.15%).

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Fund Composition

Holdings

IVE - 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%.

IEF - Holdings

IEF 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%

IEF’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

IVE IEF
Mean Return 1.05 0.32
R-squared 92.08 77.56
Std. Deviation 14.3 5.42
Alpha -2.9 -1.2
Beta 1.01 1.59
Sharpe Ratio 0.83 0.6
Treynor Ratio 11.41 1.97

The iShares S&P 500 Value ETF (IVE) has a R-squared of 92.08 with a Alpha of -2.9 and a Mean Return of 1.05. Its Standard Deviation is 14.3 while IVE’s Beta is 1.01. Furthermore, the fund has a Treynor Ratio of 11.41 and a Sharpe Ratio of 0.83.

The iShares 7-10 Year Treasury Bond ETF (IEF) has a Alpha of -1.2 with a R-squared of 77.56 and a Beta of 1.59. Its Sharpe Ratio is 0.6 while IEF’s Treynor Ratio is 1.97. Furthermore, the fund has a Mean Return of 0.32 and a Standard Deviation of 5.42.

IVE’s Mean Return is 0.73 points higher than that of IEF and its R-squared is 14.52 points higher. With a Standard Deviation of 14.3, IVE is slightly more volatile than IEF. The Alpha and Beta of IVE are 1.70 points lower and 0.58 points lower than IEF’s Alpha and Beta.

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Performance

Annual Returns

IVE vs. IEF - Annual Returns

Year IVE IEF
2020 1.24% 9.84%
2019 31.71% 8.38%
2018 -9.09% 0.82%
2017 15.19% 2.47%
2016 17.17% 1.0%
2015 -3.24% 1.55%
2014 12.14% 8.92%
2013 31.69% -6.12%
2012 17.45% 4.06%
2011 -0.63% 15.46%
2010 14.9% 9.29%

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 2011 was the strongest year for IEF, returning 15.46% on an annual basis. The poorest year for IEF in the last ten years was 2013, with a yield of -6.12%. Most years the iShares 7-10 Year Treasury Bond ETF has given investors modest returns, such as in 2017, 2012, and 2019, when gains were 2.47%, 4.06%, and 8.38% respectively.

Portfolio Growth

IVE vs. IEF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IVE $10,000 $31,350 11.68%
IEF $10,000 $16,936 5.06%

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 IEF, the end total would have been $16,936. This equates to a $6,936 profit over 11 years and a compound annual growth rate (CAGR) of 5.06%.

IVE’s CAGR is 6.62 percentage points higher than that of IEF and as a result, would have yielded $14,414 more on a $10,000 investment. Thus, IVE outperformed IEF by 6.62% annually.


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