IVE vs. SHY: What’s The Difference?

The iShares S&P 500 Value ETF (IVE) and the iShares 1-3 Year Treasury Bond ETF (SHY) are both among the Top 100 ETFs. IVE is a iShares Large Value fund and SHY is a iShares Short Government fund. So, what’s the difference between IVE and SHY? And which fund is better?

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

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

Summary

IVE SHY
Name iShares S&P 500 Value ETF iShares 1-3 Year Treasury Bond ETF
Category Large Value Short Government
Issuer iShares iShares
AUM 22.4B 19.51B
Avg. Return 11.68% 1.27%
Div. Yield 1.88% 0.46%
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 1-3 Year Treasury Bond ETF (SHY) is a Short Government fund that is issued by iShares. It currently has 19.51B total assets under management and has yielded an average annual return of 1.27% over the past 10 years. The fund has a dividend yield of 0.46% with an expense ratio of 0.15%.

IVE’s dividend yield is 1.42% higher than that of SHY (1.88% vs. 0.46%). Also, IVE yielded on average 10.41% more per year over the past decade (11.68% vs. 1.27%). The expense ratio of IVE is 0.03 percentage points higher than SHY’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%.

SHY - Holdings

SHY Bond Sectors Weight
AAA 99.67%
Others 0.33%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

SHY’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.67%, 0.33%, 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 SHY
Mean Return 1.05 0.09
R-squared 92.08 39.11
Std. Deviation 14.3 0.89
Alpha -2.9 -0.03
Beta 1.01 0.18
Sharpe Ratio 0.83 0.54
Treynor Ratio 11.41 2.6

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

The iShares 1-3 Year Treasury Bond ETF (SHY) has a Standard Deviation of 0.89 with a Beta of 0.18 and a Sharpe Ratio of 0.54. Its R-squared is 39.11 while SHY’s Mean Return is 0.09. Furthermore, the fund has a Treynor Ratio of 2.6 and a Alpha of -0.03.

IVE’s Mean Return is 0.96 points higher than that of SHY and its R-squared is 52.97 points higher. With a Standard Deviation of 14.3, IVE is slightly more volatile than SHY. The Alpha and Beta of IVE are 2.87 points lower and 0.83 points higher than SHY’s Alpha and Beta.

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Performance

Annual Returns

IVE vs. SHY - Annual Returns

Year IVE SHY
2020 1.24% 3.01%
2019 31.71% 3.42%
2018 -9.09% 1.45%
2017 15.19% 0.27%
2016 17.17% 0.75%
2015 -3.24% 0.43%
2014 12.14% 0.48%
2013 31.69% 0.23%
2012 17.45% 0.31%
2011 -0.63% 1.43%
2010 14.9% 2.23%

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 SHY, returning 3.42% on an annual basis. The poorest year for SHY in the last ten years was 2013, with a yield of 0.23%. Most years the iShares 1-3 Year Treasury Bond ETF has given investors modest returns, such as in 2014, 2016, and 2011, when gains were 0.48%, 0.75%, and 1.43% respectively.

Portfolio Growth

IVE vs. SHY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IVE $10,000 $31,350 11.68%
SHY $10,000 $11,486 1.27%

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 SHY, the end total would have been $11,486. This equates to a $1,486 profit over 11 years and a compound annual growth rate (CAGR) of 1.27%.

IVE’s CAGR is 10.41 percentage points higher than that of SHY and as a result, would have yielded $19,864 more on a $10,000 investment. Thus, IVE outperformed SHY by 10.41% annually.


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