IVW vs. SHY: What’s The Difference?

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

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

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

Summary

IVW SHY
Name iShares S&P 500 Growth ETF iShares 1-3 Year Treasury Bond ETF
Category Large Growth Short Government
Issuer iShares iShares
AUM 35.72B 19.51B
Avg. Return 16.74% 1.27%
Div. Yield 0.61% 0.46%
Expense Ratio 0.18% 0.15%

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 1-3 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%.

IVW’s dividend yield is 0.15% higher than that of SHY (0.61% vs. 0.46%). Also, IVW yielded on average 15.46% more per year over the past decade (16.74% vs. 1.27%). The expense ratio of IVW is 0.03 percentage points higher than SHY’s (0.18% vs. 0.15%).

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%.

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.

Risk Analysis

IVW SHY
Mean Return 1.44 0.09
R-squared 93.82 39.11
Std. Deviation 13.77 0.89
Alpha 2.19 -0.03
Beta 0.98 0.18
Sharpe Ratio 1.21 0.54
Treynor Ratio 17.24 2.6

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

The iShares 1-3 Year Treasury Bond ETF (SHY) has a Beta of 0.18 with a Sharpe Ratio of 0.54 and a Alpha of -0.03. 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 Standard Deviation of 0.89.

IVW’s Mean Return is 1.35 points higher than that of SHY and its R-squared is 54.71 points higher. With a Standard Deviation of 13.77, IVW is slightly more volatile than SHY. The Alpha and Beta of IVW are 2.22 points higher and 0.80 points higher than SHY’s Alpha and Beta.

Performance

Annual Returns

IVW vs. SHY - Annual Returns

Year IVW SHY
2020 33.21% 3.01%
2019 30.91% 3.42%
2018 -0.17% 1.45%
2017 27.2% 0.27%
2016 6.74% 0.75%
2015 5.33% 0.43%
2014 14.67% 0.48%
2013 32.48% 0.23%
2012 14.39% 0.31%
2011 4.49% 1.43%
2010 14.84% 2.23%

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 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

IVW vs. SHY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IVW $10,000 $51,915 16.74%
SHY $10,000 $11,486 1.27%

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 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%.

IVW’s CAGR is 15.46 percentage points higher than that of SHY and as a result, would have yielded $40,429 more on a $10,000 investment. Thus, IVW outperformed SHY by 15.46% annually.


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