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IVE vs. PFF: What’s The Difference?

The iShares S&P 500 Value ETF (IVE) and the iShares Preferred and Income Securities ETF (PFF) are both among the Top 100 ETFs. IVE is a iShares Large Value fund and PFF is a iShares Preferred Stock fund. So, what’s the difference between IVE and PFF? And which fund is better?

The expense ratio of IVE is 0.28 percentage points lower than PFF’s (0.18% vs. 0.46%). IVE also has a higher exposure to the financial services sector and a higher standard deviation. Overall, IVE has provided higher returns than PFF over the past 11 years.

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

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Summary

IVEPFF
NameiShares S&P 500 Value ETFiShares Preferred and Income Securities ETF
CategoryLarge ValuePreferred Stock
IssueriSharesiShares
AUM22.4B19.8B
Avg. Return11.68%6.90%
Div. Yield1.88%4.47%
Expense Ratio0.18%0.46%

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 Preferred and Income Securities ETF (PFF) is a Preferred Stock fund that is issued by iShares. It currently has 19.8B total assets under management and has yielded an average annual return of 6.90% over the past 10 years. The fund has a dividend yield of 4.47% with an expense ratio of 0.46%.

IVE’s dividend yield is 2.59% lower than that of PFF (1.88% vs. 4.47%). Also, IVE yielded on average 4.79% more per year over the past decade (11.68% vs. 6.90%). The expense ratio of IVE is 0.28 percentage points lower than PFF’s (0.18% vs. 0.46%).

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Fund Composition

Industry Exposure

IVE vs. PFF - Industry Exposure

IVEPFF
Technology9.41%0.0%
Industrials12.19%10.27%
Energy5.43%0.0%
Communication Services6.4%0.0%
Utilities4.82%81.81%
Healthcare15.4%3.54%
Consumer Defensive9.23%0.0%
Real Estate4.38%0.65%
Financial Services22.06%0.0%
Consumer Cyclical7.68%0.0%
Basic Materials2.99%3.74%

The iShares S&P 500 Value ETF (IVE) has the most exposure to the Financial Services sector at 22.06%. This is followed by Healthcare and Industrials at 15.4% and 12.19% respectively. Real Estate (4.38%), Utilities (4.82%), and Energy (5.43%) only make up 14.63% of the fund’s total assets.

IVE’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Consumer Defensive, Technology, and Industrials stocks at 6.4%, 7.68%, 9.23%, 9.41%, and 12.19%.

The iShares Preferred and Income Securities ETF (PFF) has the most exposure to the Utilities sector at 81.81%. This is followed by Industrials and Basic Materials at 10.27% and 3.74% respectively. Financial Services (0.0%), Consumer Defensive (0.0%), and Communication Services (0.0%) only make up 0.00% of the fund’s total assets.

PFF’s mid-section with moderate exposure is comprised of Energy, Technology, Real Estate, Healthcare, and Basic Materials stocks at 0.0%, 0.0%, 0.65%, 3.54%, and 3.74%.

IVE is 22.06% more exposed to the Financial Services sector than PFF (22.06% vs 0.0%). IVE’s exposure to Healthcare and Industrials stocks is 11.86% higher and 1.92% higher respectively (15.4% vs. 3.54% and 12.19% vs. 10.27%). In total, Real Estate, Utilities, and Energy also make up 67.83% less of the fund’s holdings compared to PFF (14.63% vs. 82.46%).

Holdings

IVE - Holdings

IVE HoldingsWeight
Berkshire Hathaway Inc Class B3.05%
JPMorgan Chase & Co2.65%
The Walt Disney Co1.85%
Bank of America Corp1.67%
Johnson & Johnson1.57%
Exxon Mobil Corp1.41%
Pfizer Inc1.38%
Cisco Systems Inc1.35%
Verizon Communications Inc1.33%
Intel Corp1.25%

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%.

PFF - Holdings

PFF HoldingsWeight
Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A2.54%
BlackRock Cash Funds Treasury SL Agency2.3%
Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-1.79%
Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-1.49%
ArcelorMittal S.A. 5.5%1.36%
Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A1.35%
Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B1.14%
NextEra Energy Inc Unit1.12%
Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.41.08%
Avantor Inc Ser A0.99%

PFF’s Top Holdings are Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A, BlackRock Cash Funds Treasury SL Agency, Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-, Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-, and ArcelorMittal S.A. 5.5% at 2.54%, 2.3%, 1.79%, 1.49%, and 1.36%.

Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A (1.35%), Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B (1.14%), and NextEra Energy Inc Unit (1.12%) have a slightly smaller but still significant weight. Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 and Avantor Inc Ser A are also represented in the PFF’s holdings at 1.08% and 0.99%.

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Risk Analysis

IVEPFF
Mean Return1.050.52
R-squared92.089.39
Std. Deviation14.37.87
Alpha-2.93.45
Beta1.010.81
Sharpe Ratio0.830.72
Treynor Ratio11.416.79

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

The iShares Preferred and Income Securities ETF (PFF) has a R-squared of 9.39 with a Standard Deviation of 7.87 and a Mean Return of 0.52. Its Treynor Ratio is 6.79 while PFF’s Beta is 0.81. Furthermore, the fund has a Sharpe Ratio of 0.72 and a Alpha of 3.45.

IVE’s Mean Return is 0.53 points higher than that of PFF and its R-squared is 82.69 points higher. With a Standard Deviation of 14.3, IVE is slightly more volatile than PFF. The Alpha and Beta of IVE are 6.35 points lower and 0.20 points higher than PFF’s Alpha and Beta.

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Performance

Annual Returns

IVE vs. PFF - Annual Returns

YearIVEPFF
20201.24%7.94%
201931.71%15.62%
2018-9.09%-4.77%
201715.19%8.33%
201617.17%1.26%
2015-3.24%4.62%
201412.14%13.45%
201331.69%-0.59%
201217.45%18.25%
2011-0.63%-2.2%
201014.9%13.96%

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 2012 was the strongest year for PFF, returning 18.25% on an annual basis. The poorest year for PFF in the last ten years was 2018, with a yield of -4.77%. Most years the iShares Preferred and Income Securities ETF has given investors modest returns, such as in 2015, 2020, and 2017, when gains were 4.62%, 7.94%, and 8.33% respectively.

Portfolio Growth

IVE vs. PFF - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IVE$10,000$31,35011.68%
PFF$10,000$20,2726.90%

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 PFF, the end total would have been $20,272. This equates to a $10,272 profit over 11 years and a compound annual growth rate (CAGR) of 6.90%.

IVE’s CAGR is 4.79 percentage points higher than that of PFF and as a result, would have yielded $11,078 more on a $10,000 investment. Thus, IVE outperformed PFF by 4.79% annually.


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