IVW vs. IGSB: What’s The Difference?

The iShares S&P 500 Growth ETF (IVW) and the iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) are both among the Top 100 ETFs. IVW is a iShares Large Growth fund and IGSB is a iShares Short-Term Bond fund. So, what’s the difference between IVW and IGSB? And which fund is better?

The expense ratio of IVW is 0.12 percentage points higher than IGSB’s (0.18% vs. 0.06%). IVW also has a high exposure to the technology sector while IGSB is mostly comprised of BBB bonds. Overall, IVW has provided higher returns than IGSB over the past ten years.

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

Summary

IVW IGSB
Name iShares S&P 500 Growth ETF iShares 1-5 Year Investment Grade Corporate Bond ETF
Category Large Growth Short-Term Bond
Issuer iShares iShares
AUM 35.72B 26.63B
Avg. Return 16.74% 2.51%
Div. Yield 0.61% 2.02%
Expense Ratio 0.18% 0.06%

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 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.

IVW’s dividend yield is 1.41% lower than that of IGSB (0.61% vs. 2.02%). Also, IVW yielded on average 14.23% more per year over the past decade (16.74% vs. 2.51%). The expense ratio of IVW is 0.12 percentage points higher than IGSB’s (0.18% vs. 0.06%).

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%.

IGSB - Holdings

IGSB Bond Sectors Weight
BBB 50.48%
A 40.04%
AA 7.46%
AAA 2.21%
BB 0.09%
Below B 0.0%
B 0.0%
US Government 0.0%
Others -0.28%

IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.

Risk Analysis

IVW IGSB
Mean Return 1.44 0.19
R-squared 93.82 26.13
Std. Deviation 13.77 2
Alpha 2.19 0.69
Beta 0.98 0.34
Sharpe Ratio 1.21 0.82
Treynor Ratio 17.24 4.82

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

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Alpha of 0.69 with a Standard Deviation of 2 and a Treynor Ratio of 4.82. Its Beta is 0.34 while IGSB’s Sharpe Ratio is 0.82. Furthermore, the fund has a R-squared of 26.13 and a Mean Return of 0.19.

IVW’s Mean Return is 1.25 points higher than that of IGSB and its R-squared is 67.69 points higher. With a Standard Deviation of 13.77, IVW is slightly more volatile than IGSB. The Alpha and Beta of IVW are 1.50 points higher and 0.64 points higher than IGSB’s Alpha and Beta.

Performance

Annual Returns

IVW vs. IGSB - Annual Returns

Year IVW IGSB
2020 33.21% 5.26%
2019 30.91% 7.01%
2018 -0.17% 1.34%
2017 27.2% 1.41%
2016 6.74% 1.77%
2015 5.33% 0.7%
2014 14.67% 0.74%
2013 32.48% 1.03%
2012 14.39% 3.28%
2011 4.49% 1.34%
2010 14.84% 3.69%

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 IGSB, returning 7.01% on an annual basis. The poorest year for IGSB in the last ten years was 2015, with a yield of 0.7%. Most years the iShares 1-5 Year Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2011, 2017, and 2016, when gains were 1.34%, 1.41%, and 1.77% respectively.

Portfolio Growth

IVW vs. IGSB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IVW $10,000 $51,915 16.74%
IGSB $10,000 $13,103 2.51%

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 IGSB, the end total would have been $13,103. This equates to a $3,103 profit over 11 years and a compound annual growth rate (CAGR) of 2.51%.

IVW’s CAGR is 14.23 percentage points higher than that of IGSB and as a result, would have yielded $38,812 more on a $10,000 investment. Thus, IVW outperformed IGSB by 14.23% annually.


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