The iShares S&P 500 Growth ETF (IVW) and the iShares TIPS Bond ETF (TIP) are both among the Top 100 ETFs. IVW is a iShares Large Growth fund and TIP is a iShares Inflation-Protected Bond fund. So, what’s the difference between IVW and TIP? And which fund is better?
The expense ratio of IVW is 0.01 percentage points lower than TIP’s (0.18% vs. 0.19%). IVW also has a high exposure to the technology sector while TIP is mostly comprised of AAA bonds. Overall, IVW has provided higher returns than TIP over the past ten years.
In this article, we’ll compare IVW vs. TIP. We’ll look at performance and portfolio growth, as well as at their fund composition and holdings. Moreover, I’ll also discuss IVW’s and TIP’s risk metrics, annual returns, and industry exposure and examine how these affect their overall returns.
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|Name||iShares S&P 500 Growth ETF||iShares TIPS Bond ETF|
|Category||Large Growth||Inflation-Protected Bond|
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 TIPS Bond ETF (TIP) is a Inflation-Protected Bond fund that is issued by iShares. It currently has 28.3B total assets under management and has yielded an average annual return of 4.07% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.19%.
IVW’s dividend yield is 1.26% lower than that of TIP (0.61% vs. 1.87%). Also, IVW yielded on average 12.66% more per year over the past decade (16.74% vs. 4.07%). The expense ratio of IVW is 0.01 percentage points lower than TIP’s (0.18% vs. 0.19%).
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|Facebook Inc Class A||4.28%|
|Alphabet Inc Class A||4.06%|
|Alphabet Inc Class C||3.86%|
|PayPal Holdings Inc||1.62%|
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%.
|TIP Bond Sectors||Weight|
TIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.31%, 0.69%, 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.
The iShares S&P 500 Growth ETF (IVW) has a Standard Deviation of 13.77 with a Sharpe Ratio of 1.21 and a Treynor Ratio of 17.24. Its R-squared is 93.82 while IVW’s Alpha is 2.19. Furthermore, the fund has a Mean Return of 1.44 and a Beta of 0.98.
The iShares TIPS Bond ETF (TIP) has a R-squared of 66.57 with a Sharpe Ratio of 0.62 and a Mean Return of 0.28. Its Treynor Ratio is 2.24 while TIP’s Beta is 1.18. Furthermore, the fund has a Standard Deviation of 4.33 and a Alpha of -0.58.
IVW’s Mean Return is 1.16 points higher than that of TIP and its R-squared is 27.25 points higher. With a Standard Deviation of 13.77, IVW is slightly more volatile than TIP. The Alpha and Beta of IVW are 2.77 points higher and 0.20 points lower than TIP’s Alpha and Beta.
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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 2011 was the strongest year for TIP, returning 13.4% on an annual basis. The poorest year for TIP in the last ten years was 2013, with a yield of -8.65%. Most years the iShares TIPS Bond ETF has given investors modest returns, such as in 2014, 2016, and 2010, when gains were 3.49%, 4.56%, and 6.1% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 TIP, the end total would have been $15,229. This equates to a $5,229 profit over 11 years and a compound annual growth rate (CAGR) of 4.07%.
IVW’s CAGR is 12.66 percentage points higher than that of TIP and as a result, would have yielded $36,686 more on a $10,000 investment. Thus, IVW outperformed TIP by 12.66% annually.
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