The iShares Russell 1000 ETF (IWB) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. IWB is a iShares Large Blend fund and TLT is a iShares Long Government fund. So, what’s the difference between IWB and TLT? And which fund is better?
IWB and TLT have the same expense ratio: 0.15%. IWB also has a high exposure to the technology sector while TLT is mostly comprised of AAA bonds. Overall, IWB has provided higher returns than TLT over the past ten years.
In this article, we’ll compare IWB vs. TLT. We’ll look at holdings and annual returns, as well as at their portfolio growth and fund composition. Moreover, I’ll also discuss IWB’s and TLT’s industry exposure, risk metrics, and performance and examine how these affect their overall returns.
Summary
| IWB | TLT | |
| Name | iShares Russell 1000 ETF | iShares 20+ Year Treasury Bond ETF |
| Category | Large Blend | Long Government |
| Issuer | iShares | iShares |
| AUM | 30.54B | 15.15B |
| Avg. Return | 14.64% | 9.00% |
| Div. Yield | 1.14% | 1.5% |
| 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 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%.
IWB’s dividend yield is 0.36% lower than that of TLT (1.14% vs. 1.5%). Also, IWB yielded on average 5.64% more per year over the past decade (14.64% vs. 9.00%). IWB and TLT have the same expense ratio: 0.15%.
Fund Composition
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%.
| TLT Bond Sectors | Weight |
| AAA | 100.0% |
| Others | 0.0% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
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.
Risk Analysis
| IWB | TLT | |
| Mean Return | 1.27 | 0.63 |
| R-squared | 99.73 | 68.76 |
| Std. Deviation | 13.87 | 12.76 |
| Alpha | -0.38 | -2.83 |
| Beta | 1.02 | 3.54 |
| Sharpe Ratio | 1.05 | 0.55 |
| Treynor Ratio | 14.31 | 1.82 |
The iShares Russell 1000 ETF (IWB) has a Alpha of -0.38 with a Sharpe Ratio of 1.05 and a R-squared of 99.73. Its Mean Return is 1.27 while IWB’s Treynor Ratio is 14.31. Furthermore, the fund has a Standard Deviation of 13.87 and a Beta of 1.02.
The iShares 20+ Year Treasury Bond ETF (TLT) has a Alpha of -2.83 with a Treynor Ratio of 1.82 and a Beta of 3.54. Its Sharpe Ratio is 0.55 while TLT’s Standard Deviation is 12.76. Furthermore, the fund has a Mean Return of 0.63 and a R-squared of 68.76.
IWB’s Mean Return is 0.64 points higher than that of TLT and its R-squared is 30.97 points higher. With a Standard Deviation of 13.87, IWB is slightly more volatile than TLT. The Alpha and Beta of IWB are 2.45 points higher and 2.52 points lower than TLT’s Alpha and Beta.
Performance
Annual Returns
| Year | IWB | TLT |
| 2020 | 20.8% | 17.92% |
| 2019 | 31.26% | 14.93% |
| 2018 | -4.91% | -2.07% |
| 2017 | 21.53% | 8.92% |
| 2016 | 11.91% | 1.36% |
| 2015 | 0.82% | -1.65% |
| 2014 | 13.08% | 27.35% |
| 2013 | 32.93% | -13.91% |
| 2012 | 16.27% | 3.25% |
| 2011 | 1.36% | 33.6% |
| 2010 | 15.94% | 9.25% |
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 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
| Fund | Initial Balance | Final Balance | CAGR |
| IWB | $10,000 | $42,462 | 14.64% |
| TLT | $10,000 | $23,809 | 9.00% |
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 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%.
IWB’s CAGR is 5.64 percentage points higher than that of TLT and as a result, would have yielded $18,653 more on a $10,000 investment. Thus, IWB outperformed TLT by 5.64% annually.
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