IWB vs. SHY: What’s The Difference?

The iShares Russell 1000 ETF (IWB) and the iShares 1-3 Year Treasury Bond ETF (SHY) are both among the Top 100 ETFs. IWB is a iShares Large Blend fund and SHY is a iShares Short Government fund. So, what’s the difference between IWB and SHY? And which fund is better?

IWB and SHY have the same expense ratio: 0.15%. IWB also has a high exposure to the technology sector while SHY is mostly comprised of AAA bonds. Overall, IWB has provided higher returns than SHY over the past ten years.

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

Summary

IWB SHY
Name iShares Russell 1000 ETF iShares 1-3 Year Treasury Bond ETF
Category Large Blend Short Government
Issuer iShares iShares
AUM 30.54B 19.51B
Avg. Return 14.64% 1.27%
Div. Yield 1.14% 0.46%
Expense Ratio 0.15% 0.15%

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 1-3 Year Treasury Bond ETF (SHY) is a Short Government fund that is issued by iShares. It currently has 19.51B total assets under management and has yielded an average annual return of 1.27% over the past 10 years. The fund has a dividend yield of 0.46% with an expense ratio of 0.15%.

IWB’s dividend yield is 0.68% higher than that of SHY (1.14% vs. 0.46%). Also, IWB yielded on average 13.36% more per year over the past decade (14.64% vs. 1.27%). IWB and SHY have the same expense ratio: 0.15%.

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%.

SHY - Holdings

SHY Bond Sectors Weight
AAA 99.67%
Others 0.33%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

SHY’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.67%, 0.33%, 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

IWB SHY
Mean Return 1.27 0.09
R-squared 99.73 39.11
Std. Deviation 13.87 0.89
Alpha -0.38 -0.03
Beta 1.02 0.18
Sharpe Ratio 1.05 0.54
Treynor Ratio 14.31 2.6

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

The iShares 1-3 Year Treasury Bond ETF (SHY) has a R-squared of 39.11 with a Treynor Ratio of 2.6 and a Beta of 0.18. Its Standard Deviation is 0.89 while SHY’s Alpha is -0.03. Furthermore, the fund has a Sharpe Ratio of 0.54 and a Mean Return of 0.09.

IWB’s Mean Return is 1.18 points higher than that of SHY and its R-squared is 60.62 points higher. With a Standard Deviation of 13.87, IWB is slightly more volatile than SHY. The Alpha and Beta of IWB are 0.35 points lower and 0.84 points higher than SHY’s Alpha and Beta.

Performance

Annual Returns

IWB vs. SHY - Annual Returns

Year IWB SHY
2020 20.8% 3.01%
2019 31.26% 3.42%
2018 -4.91% 1.45%
2017 21.53% 0.27%
2016 11.91% 0.75%
2015 0.82% 0.43%
2014 13.08% 0.48%
2013 32.93% 0.23%
2012 16.27% 0.31%
2011 1.36% 1.43%
2010 15.94% 2.23%

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 SHY, returning 3.42% on an annual basis. The poorest year for SHY in the last ten years was 2013, with a yield of 0.23%. Most years the iShares 1-3 Year Treasury Bond ETF has given investors modest returns, such as in 2014, 2016, and 2011, when gains were 0.48%, 0.75%, and 1.43% respectively.

Portfolio Growth

IWB vs. SHY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWB $10,000 $42,462 14.64%
SHY $10,000 $11,486 1.27%

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 SHY, the end total would have been $11,486. This equates to a $1,486 profit over 11 years and a compound annual growth rate (CAGR) of 1.27%.

IWB’s CAGR is 13.36 percentage points higher than that of SHY and as a result, would have yielded $30,976 more on a $10,000 investment. Thus, IWB outperformed SHY by 13.36% annually.


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