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IWB vs. GOVT: What’s The Difference?

The iShares Russell 1000 ETF (IWB) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. IWB is a iShares Large Blend fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between IWB and GOVT? And which fund is better?

The expense ratio of IWB is 0.10 percentage points higher than GOVT’s (0.15% vs. 0.05%). IWB also has a high exposure to the technology sector while GOVT is mostly comprised of AAA bonds. Overall, IWB has provided higher returns than GOVT over the past ten years.

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

Summary

IWBGOVT
NameiShares Russell 1000 ETFiShares U.S. Treasury Bond ETF
CategoryLarge BlendIntermediate Government
IssueriSharesiShares
AUM30.54B17.07B
Avg. Return14.64%2.67%
Div. Yield1.14%1.0%
Expense Ratio0.15%0.05%

The iShares Russell 1000 ETF (IWB) is a Large Blend fund that is issued by iShares. It currently has 30.54B total assets under management and has yielded an average annual return of 14.64% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.15%.

The iShares U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.

IWB’s dividend yield is 0.14% higher than that of GOVT (1.14% vs. 1.0%). Also, IWB yielded on average 11.96% more per year over the past decade (14.64% vs. 2.67%). The expense ratio of IWB is 0.10 percentage points higher than GOVT’s (0.15% vs. 0.05%).

Fund Composition

Holdings

IWB - Holdings

IWB HoldingsWeight
Apple Inc5.45%
Microsoft Corp5.11%
Amazon.com Inc3.43%
Facebook Inc Class A2.03%
Alphabet Inc Class A1.93%
Alphabet Inc Class C1.82%
Tesla Inc1.27%
Berkshire Hathaway Inc Class B1.24%
NVIDIA Corp1.11%
JPMorgan Chase & Co1.09%

IWB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.45%, 5.11%, 3.43%, 2.03%, and 1.93%.

Alphabet Inc Class C (1.82%), Tesla Inc (1.27%), and Berkshire Hathaway Inc Class B (1.24%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the IWB’s holdings at 1.11% and 1.09%.

GOVT - Holdings

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

GOVT’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.

Risk Analysis

IWBGOVT
Mean Return1.270
R-squared99.730
Std. Deviation13.870
Alpha-0.380
Beta1.020
Sharpe Ratio1.050
Treynor Ratio14.310

The iShares Russell 1000 ETF (IWB) has a R-squared of 99.73 with a Treynor Ratio of 14.31 and a Sharpe Ratio of 1.05. Its Mean Return is 1.27 while IWB’s Beta is 1.02. Furthermore, the fund has a Standard Deviation of 13.87 and a Alpha of -0.38.

The iShares U.S. Treasury Bond ETF (GOVT) has a R-squared of 0 with a Treynor Ratio of 0 and a Beta of 0. Its Alpha is 0 while GOVT’s Standard Deviation is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Mean Return of 0.

IWB’s Mean Return is 1.27 points higher than that of GOVT and its R-squared is 99.73 points higher. With a Standard Deviation of 13.87, IWB is slightly more volatile than GOVT. The Alpha and Beta of IWB are 0.38 points lower and 1.02 points higher than GOVT’s Alpha and Beta.

Performance

Annual Returns

IWB vs. GOVT - Annual Returns

YearIWBGOVT
202020.8%7.92%
201931.26%6.71%
2018-4.91%0.74%
201721.53%2.19%
201611.91%0.92%
20150.82%0.76%
201413.08%4.99%
201332.93%-2.84%
201216.27%0.0%
20111.36%0.0%
201015.94%0.0%

IWB had its best year in 2013 with an annual return of 32.93%. IWB’s worst year over the past decade yielded -4.91% and occurred in 2018. In most years the iShares Russell 1000 ETF provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.08%, 15.94%, and 16.27% respectively.

The year 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.

Portfolio Growth

IWB vs. GOVT - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IWB$10,000$31,07714.64%
GOVT$10,000$12,2972.67%

A $10,000 investment in IWB would have resulted in a final balance of $31,077. This is a profit of $21,077 over 8 years and amounts to a compound annual growth rate (CAGR) of 14.64%.

With a $10,000 investment in GOVT, the end total would have been $12,297. This equates to a $2,297 profit over 8 years and a compound annual growth rate (CAGR) of 2.67%.

IWB’s CAGR is 11.96 percentage points higher than that of GOVT and as a result, would have yielded $18,780 more on a $10,000 investment. Thus, IWB outperformed GOVT by 11.96% annually.


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