IVW vs. GOVT: What’s The Difference?

The iShares S&P 500 Growth ETF (IVW) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. IVW is a iShares Large Growth fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between IVW and GOVT? And which fund is better?

The expense ratio of IVW is 0.13 percentage points higher than GOVT’s (0.18% vs. 0.05%). IVW also has a high exposure to the technology sector while GOVT is mostly comprised of AAA bonds. Overall, IVW has provided higher returns than GOVT over the past ten years.

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

Summary

IVW GOVT
Name iShares S&P 500 Growth ETF iShares U.S. Treasury Bond ETF
Category Large Growth Intermediate Government
Issuer iShares iShares
AUM 35.72B 17.07B
Avg. Return 16.74% 2.67%
Div. Yield 0.61% 1.0%
Expense Ratio 0.18% 0.05%

The iShares S&P 500 Growth ETF (IVW) is a Large Growth fund that is issued by iShares. It currently has 35.72B total assets under management and has yielded an average annual return of 16.74% over the past 10 years. The fund has a dividend yield of 0.61% with an expense ratio of 0.18%.

The iShares U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.

IVW’s dividend yield is 0.39% lower than that of GOVT (0.61% vs. 1.0%). Also, IVW yielded on average 14.06% more per year over the past decade (16.74% vs. 2.67%). The expense ratio of IVW is 0.13 percentage points higher than GOVT’s (0.18% vs. 0.05%).

Fund Composition

Holdings

IVW - Holdings

IVW Holdings Weight
Apple Inc 11.46%
Microsoft Corp 10.75%
Amazon.com Inc 7.14%
Facebook Inc Class A 4.28%
Alphabet Inc Class A 4.06%
Alphabet Inc Class C 3.86%
Tesla Inc 2.65%
NVIDIA Corp 2.43%
PayPal Holdings Inc 1.62%
Adobe Inc 1.49%

IVW’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 11.46%, 10.75%, 7.14%, 4.28%, and 4.06%.

Alphabet Inc Class C (3.86%), Tesla Inc (2.65%), and NVIDIA Corp (2.43%) have a slightly smaller but still significant weight. PayPal Holdings Inc and Adobe Inc are also represented in the IVW’s holdings at 1.62% and 1.49%.

GOVT - Holdings

GOVT 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%

GOVT’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

IVW GOVT
Mean Return 1.44 0
R-squared 93.82 0
Std. Deviation 13.77 0
Alpha 2.19 0
Beta 0.98 0
Sharpe Ratio 1.21 0
Treynor Ratio 17.24 0

The iShares S&P 500 Growth ETF (IVW) has a Treynor Ratio of 17.24 with a Sharpe Ratio of 1.21 and a Standard Deviation of 13.77. Its Mean Return is 1.44 while IVW’s Beta is 0.98. Furthermore, the fund has a Alpha of 2.19 and a R-squared of 93.82.

The iShares U.S. Treasury Bond ETF (GOVT) has a Beta of 0 with a Sharpe Ratio of 0 and a Treynor Ratio of 0. Its Mean Return is 0 while GOVT’s R-squared is 0. Furthermore, the fund has a Alpha of 0 and a Standard Deviation of 0.

IVW’s Mean Return is 1.44 points higher than that of GOVT and its R-squared is 93.82 points higher. With a Standard Deviation of 13.77, IVW is slightly more volatile than GOVT. The Alpha and Beta of IVW are 2.19 points higher and 0.98 points higher than GOVT’s Alpha and Beta.

Performance

Annual Returns

IVW vs. GOVT - Annual Returns

Year IVW GOVT
2020 33.21% 7.92%
2019 30.91% 6.71%
2018 -0.17% 0.74%
2017 27.2% 2.19%
2016 6.74% 0.92%
2015 5.33% 0.76%
2014 14.67% 4.99%
2013 32.48% -2.84%
2012 14.39% 0.0%
2011 4.49% 0.0%
2010 14.84% 0.0%

IVW had its best year in 2020 with an annual return of 33.21%. IVW’s worst year over the past decade yielded -0.17% and occurred in 2018. In most years the iShares S&P 500 Growth ETF provided moderate returns such as in 2012, 2014, and 2010 where annual returns amounted to 14.39%, 14.67%, and 14.84% respectively.

The year 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.

Portfolio Growth

IVW vs. GOVT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IVW $10,000 $37,821 16.74%
GOVT $10,000 $12,297 2.67%

A $10,000 investment in IVW would have resulted in a final balance of $37,821. This is a profit of $27,821 over 8 years and amounts to a compound annual growth rate (CAGR) of 16.74%.

With a $10,000 investment in GOVT, the end total would have been $12,297. This equates to a $2,297 profit over 8 years and a compound annual growth rate (CAGR) of 2.67%.

IVW’s CAGR is 14.06 percentage points higher than that of GOVT and as a result, would have yielded $25,524 more on a $10,000 investment. Thus, IVW outperformed GOVT by 14.06% annually.


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