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IVW vs. HYG: What’s The Difference?

The iShares S&P 500 Growth ETF (IVW) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) are both among the Top 100 ETFs. IVW is a iShares Large Growth fund and HYG is a iShares High Yield Bond fund. So, what’s the difference between IVW and HYG? And which fund is better?

The expense ratio of IVW is 0.30 percentage points lower than HYG’s (0.18% vs. 0.48%). IVW also has a high exposure to the technology sector while HYG is mostly comprised of BB bonds. Overall, IVW has provided higher returns than HYG over the past ten years.

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

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Summary

IVWHYG
NameiShares S&P 500 Growth ETFiShares iBoxx $ High Yield Corporate Bond ETF
CategoryLarge GrowthHigh Yield Bond
IssueriSharesiShares
AUM35.72B20.03B
Avg. Return16.74%6.42%
Div. Yield0.61%4.44%
Expense Ratio0.18%0.48%

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 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%.

IVW’s dividend yield is 3.83% lower than that of HYG (0.61% vs. 4.44%). Also, IVW yielded on average 10.32% more per year over the past decade (16.74% vs. 6.42%). The expense ratio of IVW is 0.30 percentage points lower than HYG’s (0.18% vs. 0.48%).

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Fund Composition

Holdings

IVW - Holdings

IVW HoldingsWeight
Apple Inc11.46%
Microsoft Corp10.75%
Amazon.com Inc7.14%
Facebook Inc Class A4.28%
Alphabet Inc Class A4.06%
Alphabet Inc Class C3.86%
Tesla Inc2.65%
NVIDIA Corp2.43%
PayPal Holdings Inc1.62%
Adobe Inc1.49%

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%.

HYG - Holdings

HYG Bond SectorsWeight
BB56.53%
B31.27%
Below B11.4%
BBB0.61%
AAA0.28%
A0.0%
AA0.0%
US Government0.0%
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.

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Risk Analysis

IVWHYG
Mean Return1.440.46
R-squared93.824.1
Std. Deviation13.776.96
Alpha2.193.58
Beta0.980.48
Sharpe Ratio1.210.7
Treynor Ratio17.2410.01

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

The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) has a Mean Return of 0.46 with a R-squared of 4.1 and a Alpha of 3.58. Its Sharpe Ratio is 0.7 while HYG’s Treynor Ratio is 10.01. Furthermore, the fund has a Beta of 0.48 and a Standard Deviation of 6.96.

IVW’s Mean Return is 0.98 points higher than that of HYG and its R-squared is 89.72 points higher. With a Standard Deviation of 13.77, IVW is slightly more volatile than HYG. The Alpha and Beta of IVW are 1.39 points lower and 0.50 points higher than HYG’s Alpha and Beta.

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Performance

Annual Returns

IVW vs. HYG - Annual Returns

YearIVWHYG
202033.21%4.12%
201930.91%14.23%
2018-0.17%-1.93%
201727.2%6.09%
20166.74%13.92%
20155.33%-5.55%
201414.67%2.0%
201332.48%5.9%
201214.39%13.83%
20114.49%5.89%
201014.84%12.07%

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 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

IVW vs. HYG - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IVW$10,000$51,91516.74%
HYG$10,000$19,4276.42%

A $10,000 investment in IVW would have resulted in a final balance of $51,915. This is a profit of $41,915 over 11 years and amounts to a compound annual growth rate (CAGR) of 16.74%.

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%.

IVW’s CAGR is 10.32 percentage points higher than that of HYG and as a result, would have yielded $32,488 more on a $10,000 investment. Thus, IVW outperformed HYG by 10.32% annually.


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