IWB vs. SDY: What’s The Difference?

The iShares Russell 1000 ETF (IWB) and the SPDR S&P Dividend ETF (SDY) are both among the Top 100 ETFs. IWB is a iShares Large Blend fund and SDY is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between IWB and SDY? And which fund is better?

The expense ratio of IWB is 0.20 percentage points lower than SDY’s (0.15% vs. 0.35%). IWB also has a higher exposure to the technology sector and a higher standard deviation. Overall, IWB has provided higher returns than SDY over the past ten years.

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

Summary

IWB SDY
Name iShares Russell 1000 ETF SPDR S&P Dividend ETF
Category Large Blend Large Value
Issuer iShares SPDR State Street Global Advisors
AUM 30.54B 19.67B
Avg. Return 14.64% 12.44%
Div. Yield 1.14% 2.65%
Expense Ratio 0.15% 0.35%

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 SPDR S&P Dividend ETF (SDY) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 19.67B total assets under management and has yielded an average annual return of 12.44% over the past 10 years. The fund has a dividend yield of 2.65% with an expense ratio of 0.35%.

IWB’s dividend yield is 1.51% lower than that of SDY (1.14% vs. 2.65%). Also, IWB yielded on average 2.20% more per year over the past decade (14.64% vs. 12.44%). The expense ratio of IWB is 0.20 percentage points lower than SDY’s (0.15% vs. 0.35%).

Fund Composition

Industry Exposure

IWB vs. SDY - Industry Exposure

IWB SDY
Technology 25.33% 2.0%
Industrials 8.88% 15.89%
Energy 2.44% 5.95%
Communication Services 10.83% 4.64%
Utilities 2.36% 12.14%
Healthcare 13.35% 7.35%
Consumer Defensive 5.97% 14.01%
Real Estate 3.34% 6.57%
Financial Services 13.64% 16.32%
Consumer Cyclical 11.85% 8.68%
Basic Materials 2.02% 6.45%

The iShares Russell 1000 ETF (IWB) has the most exposure to the Technology sector at 25.33%. This is followed by Financial Services and Healthcare at 13.64% and 13.35% respectively. Utilities (2.36%), Energy (2.44%), and Real Estate (3.34%) only make up 8.14% of the fund’s total assets.

IWB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.88%, 10.83%, 11.85%, and 13.35%.

The SPDR S&P Dividend ETF (SDY) has the most exposure to the Financial Services sector at 16.32%. This is followed by Industrials and Consumer Defensive at 15.89% and 14.01% respectively. Communication Services (4.64%), Energy (5.95%), and Basic Materials (6.45%) only make up 17.04% of the fund’s total assets.

SDY’s mid-section with moderate exposure is comprised of Real Estate, Healthcare, Consumer Cyclical, Utilities, and Consumer Defensive stocks at 6.57%, 7.35%, 8.68%, 12.14%, and 14.01%.

IWB is 23.33% more exposed to the Technology sector than SDY (25.33% vs 2.0%). IWB’s exposure to Financial Services and Healthcare stocks is 2.68% lower and 6.00% higher respectively (13.64% vs. 16.32% and 13.35% vs. 7.35%). In total, Utilities, Energy, and Real Estate also make up 16.52% less of the fund’s holdings compared to SDY (8.14% vs. 24.66%).

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%.

SDY - Holdings

SDY Holdings Weight
Exxon Mobil Corp 2.81%
AT&T Inc 2.5%
South Jersey Industries Inc 2.22%
Chevron Corp 2.02%
International Business Machines Corp 2.0%
AbbVie Inc 1.93%
National Retail Properties Inc 1.86%
Federal Realty Investment Trust 1.77%
Realty Income Corp 1.7%
Old Republic International Corp 1.65%

SDY’s Top Holdings are Exxon Mobil Corp, AT&T Inc, South Jersey Industries Inc, Chevron Corp, and International Business Machines Corp at 2.81%, 2.5%, 2.22%, 2.02%, and 2.0%.

AbbVie Inc (1.93%), National Retail Properties Inc (1.86%), and Federal Realty Investment Trust (1.77%) have a slightly smaller but still significant weight. Realty Income Corp and Old Republic International Corp are also represented in the SDY’s holdings at 1.7% and 1.65%.

Risk Analysis

IWB SDY
Mean Return 1.27 1.07
R-squared 99.73 83.62
Std. Deviation 13.87 12.9
Alpha -0.38 -0.1
Beta 1.02 0.87
Sharpe Ratio 1.05 0.95
Treynor Ratio 14.31 13.94

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

The SPDR S&P Dividend ETF (SDY) has a Beta of 0.87 with a Alpha of -0.1 and a Mean Return of 1.07. Its Sharpe Ratio is 0.95 while SDY’s Standard Deviation is 12.9. Furthermore, the fund has a R-squared of 83.62 and a Treynor Ratio of 13.94.

IWB’s Mean Return is 0.20 points higher than that of SDY and its R-squared is 16.11 points higher. With a Standard Deviation of 13.87, IWB is slightly more volatile than SDY. The Alpha and Beta of IWB are 0.28 points lower and 0.15 points higher than SDY’s Alpha and Beta.

Performance

Annual Returns

IWB vs. SDY - Annual Returns

Year IWB SDY
2020 20.8% 1.78%
2019 31.26% 23.37%
2018 -4.91% -2.73%
2017 21.53% 15.84%
2016 11.91% 20.17%
2015 0.82% -0.7%
2014 13.08% 13.8%
2013 32.93% 30.09%
2012 16.27% 11.51%
2011 1.36% 7.28%
2010 15.94% 16.41%

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 2013 was the strongest year for SDY, returning 30.09% on an annual basis. The poorest year for SDY in the last ten years was 2018, with a yield of -2.73%. Most years the SPDR S&P Dividend ETF has given investors modest returns, such as in 2012, 2014, and 2017, when gains were 11.51%, 13.8%, and 15.84% respectively.

Portfolio Growth

IWB vs. SDY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWB $10,000 $42,462 14.64%
SDY $10,000 $34,806 12.44%

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 SDY, the end total would have been $34,806. This equates to a $24,806 profit over 11 years and a compound annual growth rate (CAGR) of 12.44%.

IWB’s CAGR is 2.20 percentage points higher than that of SDY and as a result, would have yielded $7,656 more on a $10,000 investment. Thus, IWB outperformed SDY by 2.20% annually.


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