IWB vs. IGSB: What’s The Difference?

The iShares Russell 1000 ETF (IWB) and the iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) are both among the Top 100 ETFs. IWB is a iShares Large Blend fund and IGSB is a iShares Short-Term Bond fund. So, what’s the difference between IWB and IGSB? And which fund is better?

The expense ratio of IWB is 0.09 percentage points higher than IGSB’s (0.15% vs. 0.06%). IWB also has a high exposure to the technology sector while IGSB is mostly comprised of BBB bonds. Overall, IWB has provided higher returns than IGSB over the past ten years.

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

Summary

IWB IGSB
Name iShares Russell 1000 ETF iShares 1-5 Year Investment Grade Corporate Bond ETF
Category Large Blend Short-Term Bond
Issuer iShares iShares
AUM 30.54B 26.63B
Avg. Return 14.64% 2.51%
Div. Yield 1.14% 2.02%
Expense Ratio 0.15% 0.06%

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 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.

IWB’s dividend yield is 0.88% lower than that of IGSB (1.14% vs. 2.02%). Also, IWB yielded on average 12.13% more per year over the past decade (14.64% vs. 2.51%). The expense ratio of IWB is 0.09 percentage points higher than IGSB’s (0.15% vs. 0.06%).

Fund Composition

Holdings

IWB - Holdings

IWB Holdings Weight
Apple Inc 5.45%
Microsoft Corp 5.11%
Amazon.com Inc 3.43%
Facebook Inc Class A 2.03%
Alphabet Inc Class A 1.93%
Alphabet Inc Class C 1.82%
Tesla Inc 1.27%
Berkshire Hathaway Inc Class B 1.24%
NVIDIA Corp 1.11%
JPMorgan Chase & Co 1.09%

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%.

IGSB - Holdings

IGSB Bond Sectors Weight
BBB 50.48%
A 40.04%
AA 7.46%
AAA 2.21%
BB 0.09%
Below B 0.0%
B 0.0%
US Government 0.0%
Others -0.28%

IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.

Risk Analysis

IWB IGSB
Mean Return 1.27 0.19
R-squared 99.73 26.13
Std. Deviation 13.87 2
Alpha -0.38 0.69
Beta 1.02 0.34
Sharpe Ratio 1.05 0.82
Treynor Ratio 14.31 4.82

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

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Alpha of 0.69 with a Sharpe Ratio of 0.82 and a R-squared of 26.13. Its Treynor Ratio is 4.82 while IGSB’s Beta is 0.34. Furthermore, the fund has a Mean Return of 0.19 and a Standard Deviation of 2.

IWB’s Mean Return is 1.08 points higher than that of IGSB and its R-squared is 73.60 points higher. With a Standard Deviation of 13.87, IWB is slightly more volatile than IGSB. The Alpha and Beta of IWB are 1.07 points lower and 0.68 points higher than IGSB’s Alpha and Beta.

Performance

Annual Returns

IWB vs. IGSB - Annual Returns

Year IWB IGSB
2020 20.8% 5.26%
2019 31.26% 7.01%
2018 -4.91% 1.34%
2017 21.53% 1.41%
2016 11.91% 1.77%
2015 0.82% 0.7%
2014 13.08% 0.74%
2013 32.93% 1.03%
2012 16.27% 3.28%
2011 1.36% 1.34%
2010 15.94% 3.69%

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 2019 was the strongest year for IGSB, returning 7.01% on an annual basis. The poorest year for IGSB in the last ten years was 2015, with a yield of 0.7%. Most years the iShares 1-5 Year Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2011, 2017, and 2016, when gains were 1.34%, 1.41%, and 1.77% respectively.

Portfolio Growth

IWB vs. IGSB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWB $10,000 $42,462 14.64%
IGSB $10,000 $13,103 2.51%

A $10,000 investment in IWB would have resulted in a final balance of $42,462. This is a profit of $32,462 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.64%.

With a $10,000 investment in IGSB, the end total would have been $13,103. This equates to a $3,103 profit over 11 years and a compound annual growth rate (CAGR) of 2.51%.

IWB’s CAGR is 12.13 percentage points higher than that of IGSB and as a result, would have yielded $29,359 more on a $10,000 investment. Thus, IWB outperformed IGSB by 12.13% annually.


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