IVW vs. PFF: What’s The Difference?

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

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

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

Summary

IVW PFF
Name iShares S&P 500 Growth ETF iShares Preferred and Income Securities ETF
Category Large Growth Preferred Stock
Issuer iShares iShares
AUM 35.72B 19.8B
Avg. Return 16.74% 6.90%
Div. Yield 0.61% 4.47%
Expense Ratio 0.18% 0.46%

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 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%.

IVW’s dividend yield is 3.86% lower than that of PFF (0.61% vs. 4.47%). Also, IVW yielded on average 9.84% more per year over the past decade (16.74% vs. 6.90%). The expense ratio of IVW is 0.28 percentage points lower than PFF’s (0.18% vs. 0.46%).

Fund Composition

Industry Exposure

IVW vs. PFF - Industry Exposure

IVW PFF
Technology 37.8% 0.0%
Industrials 5.72% 10.27%
Energy 0.06% 0.0%
Communication Services 15.44% 0.0%
Utilities 0.47% 81.81%
Healthcare 11.88% 3.54%
Consumer Defensive 3.84% 0.0%
Real Estate 1.11% 0.65%
Financial Services 6.78% 0.0%
Consumer Cyclical 15.25% 0.0%
Basic Materials 1.65% 3.74%

The iShares S&P 500 Growth ETF (IVW) has the most exposure to the Technology sector at 37.8%. This is followed by Communication Services and Consumer Cyclical at 15.44% and 15.25% respectively. Utilities (0.47%), Real Estate (1.11%), and Basic Materials (1.65%) only make up 3.23% of the fund’s total assets.

IVW’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 3.84%, 5.72%, 6.78%, 11.88%, and 15.25%.

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%.

IVW is 37.80% more exposed to the Technology sector than PFF (37.8% vs 0.0%). IVW’s exposure to Communication Services and Consumer Cyclical stocks is 15.44% higher and 15.25% higher respectively (15.44% vs. 0.0% and 15.25% vs. 0.0%). In total, Utilities, Real Estate, and Basic Materials also make up 82.97% less of the fund’s holdings compared to PFF (3.23% vs. 86.20%).

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%.

PFF - Holdings

PFF Holdings Weight
Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A 2.54%
BlackRock Cash Funds Treasury SL Agency 2.3%
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 A 1.35%
Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B 1.14%
NextEra Energy Inc Unit 1.12%
Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 1.08%
Avantor Inc Ser A 0.99%

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%.

Risk Analysis

IVW PFF
Mean Return 1.44 0.52
R-squared 93.82 9.39
Std. Deviation 13.77 7.87
Alpha 2.19 3.45
Beta 0.98 0.81
Sharpe Ratio 1.21 0.72
Treynor Ratio 17.24 6.79

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

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

IVW’s Mean Return is 0.92 points higher than that of PFF and its R-squared is 84.43 points higher. With a Standard Deviation of 13.77, IVW is slightly more volatile than PFF. The Alpha and Beta of IVW are 1.26 points lower and 0.17 points higher than PFF’s Alpha and Beta.

Performance

Annual Returns

IVW vs. PFF - Annual Returns

Year IVW PFF
2020 33.21% 7.94%
2019 30.91% 15.62%
2018 -0.17% -4.77%
2017 27.2% 8.33%
2016 6.74% 1.26%
2015 5.33% 4.62%
2014 14.67% 13.45%
2013 32.48% -0.59%
2012 14.39% 18.25%
2011 4.49% -2.2%
2010 14.84% 13.96%

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 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

IVW vs. PFF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IVW $10,000 $51,915 16.74%
PFF $10,000 $20,272 6.90%

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 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%.

IVW’s CAGR is 9.84 percentage points higher than that of PFF and as a result, would have yielded $31,643 more on a $10,000 investment. Thus, IVW outperformed PFF by 9.84% annually.


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