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IVW vs. TLT: What’s The Difference?

The iShares S&P 500 Growth ETF (IVW) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. IVW is a iShares Large Growth fund and TLT is a iShares Long Government fund. So, what’s the difference between IVW and TLT? And which fund is better?

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

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

Introduction To Mutual Funds
Introduction To Mutual Funds
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Summary

IVWTLT
NameiShares S&P 500 Growth ETFiShares 20+ Year Treasury Bond ETF
CategoryLarge GrowthLong Government
IssueriSharesiShares
AUM35.72B15.15B
Avg. Return16.74%9.00%
Div. Yield0.61%1.5%
Expense Ratio0.18%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 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.

IVW’s dividend yield is 0.89% lower than that of TLT (0.61% vs. 1.5%). Also, IVW yielded on average 7.74% more per year over the past decade (16.74% vs. 9.00%). The expense ratio of IVW is 0.03 percentage points higher than TLT’s (0.18% vs. 0.15%).

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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%.

TLT - Holdings

TLT Bond SectorsWeight
AAA100.0%
Others0.0%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

TLT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 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.

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Risk Analysis

IVWTLT
Mean Return1.440.63
R-squared93.8268.76
Std. Deviation13.7712.76
Alpha2.19-2.83
Beta0.983.54
Sharpe Ratio1.210.55
Treynor Ratio17.241.82

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

The iShares 20+ Year Treasury Bond ETF (TLT) has a R-squared of 68.76 with a Alpha of -2.83 and a Sharpe Ratio of 0.55. Its Treynor Ratio is 1.82 while TLT’s Beta is 3.54. Furthermore, the fund has a Mean Return of 0.63 and a Standard Deviation of 12.76.

IVW’s Mean Return is 0.81 points higher than that of TLT and its R-squared is 25.06 points higher. With a Standard Deviation of 13.77, IVW is slightly more volatile than TLT. The Alpha and Beta of IVW are 5.02 points higher and 2.56 points lower than TLT’s Alpha and Beta.

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Performance

Annual Returns

IVW vs. TLT - Annual Returns

YearIVWTLT
202033.21%17.92%
201930.91%14.93%
2018-0.17%-2.07%
201727.2%8.92%
20166.74%1.36%
20155.33%-1.65%
201414.67%27.35%
201332.48%-13.91%
201214.39%3.25%
20114.49%33.6%
201014.84%9.25%

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 TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% respectively.

Portfolio Growth

IVW vs. TLT - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IVW$10,000$51,91516.74%
TLT$10,000$23,8099.00%

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 TLT, the end total would have been $23,809. This equates to a $13,809 profit over 11 years and a compound annual growth rate (CAGR) of 9.00%.

IVW’s CAGR is 7.74 percentage points higher than that of TLT and as a result, would have yielded $28,106 more on a $10,000 investment. Thus, IVW outperformed TLT by 7.74% annually.


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