The iShares Russell 1000 Value ETF (IWD) and the Vanguard Short-Term Bond Index Fund ETF Shares (BSV) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and BSV is a Vanguard Short-Term Bond fund. So, what’s the difference between IWD and BSV? And which fund is better?
The expense ratio of IWD is 0.14 percentage points higher than BSV’s (0.19% vs. 0.05%). IWD also has a high exposure to the financial services sector while BSV is mostly comprised of AAA bonds. Overall, IWD has provided higher returns than BSV over the past ten years.
In this article, we’ll compare IWD vs. BSV. We’ll look at holdings and fund composition, as well as at their industry exposure and portfolio growth. Moreover, I’ll also discuss IWD’s and BSV’s risk metrics, annual returns, and performance and examine how these affect their overall returns.
Summary
| IWD | BSV | |
| Name | iShares Russell 1000 Value ETF | Vanguard Short-Term Bond Index Fund ETF Shares |
| Category | Large Value | Short-Term Bond |
| Issuer | iShares | Vanguard |
| AUM | 54.1B | 67.71B |
| Avg. Return | 11.40% | 2.27% |
| Div. Yield | 1.57% | 1.48% |
| Expense Ratio | 0.19% | 0.05% |
The iShares Russell 1000 Value ETF (IWD) is a Large Value fund that is issued by iShares. It currently has 54.1B total assets under management and has yielded an average annual return of 11.40% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.19%.
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) is a Short-Term Bond fund that is issued by Vanguard. It currently has 67.71B total assets under management and has yielded an average annual return of 2.27% over the past 10 years. The fund has a dividend yield of 1.48% with an expense ratio of 0.05%.
IWD’s dividend yield is 0.09% higher than that of BSV (1.57% vs. 1.48%). Also, IWD yielded on average 9.13% more per year over the past decade (11.40% vs. 2.27%). The expense ratio of IWD is 0.14 percentage points higher than BSV’s (0.19% vs. 0.05%).
Fund Composition
Holdings
| IWD Holdings | Weight |
| Berkshire Hathaway Inc Class B | 2.58% |
| JPMorgan Chase & Co | 2.25% |
| Johnson & Johnson | 2.24% |
| UnitedHealth Group Inc | 1.78% |
| Procter & Gamble Co | 1.71% |
| The Walt Disney Co | 1.5% |
| Bank of America Corp | 1.43% |
| Comcast Corp Class A | 1.33% |
| Exxon Mobil Corp | 1.2% |
| Pfizer Inc | 1.18% |
IWD’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.58%, 2.25%, 2.24%, 1.78%, and 1.71%.
The Walt Disney Co (1.5%), Bank of America Corp (1.43%), and Comcast Corp Class A (1.33%) have a slightly smaller but still significant weight. Exxon Mobil Corp and Pfizer Inc are also represented in the IWD’s holdings at 1.2% and 1.18%.
| BSV Bond Sectors | Weight |
| AAA | 71.65% |
| BBB | 13.08% |
| A | 11.95% |
| AA | 3.28% |
| Others | 0.03% |
| Below B | 0.01% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
BSV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 71.65%, 13.08%, 11.95%, 3.28%, and 0.03%. The fund is less weighted towards Below B (0.01%), B (0.0%), and BB (0.0%) rated bonds.
Risk Analysis
| IWD | BSV | |
| Mean Return | 1.03 | 0.16 |
| R-squared | 92.38 | 78.38 |
| Std. Deviation | 14.35 | 1.33 |
| Alpha | -3.23 | 0.21 |
| Beta | 1.02 | 0.38 |
| Sharpe Ratio | 0.81 | 0.98 |
| Treynor Ratio | 11.06 | 3.33 |
The iShares Russell 1000 Value ETF (IWD) has a Alpha of -3.23 with a Beta of 1.02 and a Treynor Ratio of 11.06. Its Sharpe Ratio is 0.81 while IWD’s R-squared is 92.38. Furthermore, the fund has a Mean Return of 1.03 and a Standard Deviation of 14.35.
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Alpha of 0.21 with a Standard Deviation of 1.33 and a Mean Return of 0.16. Its Beta is 0.38 while BSV’s Sharpe Ratio is 0.98. Furthermore, the fund has a Treynor Ratio of 3.33 and a R-squared of 78.38.
IWD’s Mean Return is 0.87 points higher than that of BSV and its R-squared is 14.00 points higher. With a Standard Deviation of 14.35, IWD is slightly more volatile than BSV. The Alpha and Beta of IWD are 3.44 points lower and 0.64 points higher than BSV’s Alpha and Beta.
Performance
Annual Returns
| Year | IWD | BSV |
| 2020 | 2.67% | 4.67% |
| 2019 | 26.34% | 4.92% |
| 2018 | -8.4% | 1.34% |
| 2017 | 13.47% | 1.2% |
| 2016 | 17.09% | 1.42% |
| 2015 | -3.95% | 0.92% |
| 2014 | 13.21% | 1.32% |
| 2013 | 32.18% | 0.17% |
| 2012 | 17.28% | 1.98% |
| 2011 | 0.21% | 3.04% |
| 2010 | 15.3% | 4.0% |
IWD had its best year in 2013 with an annual return of 32.18%. IWD’s worst year over the past decade yielded -8.4% and occurred in 2018. In most years the iShares Russell 1000 Value ETF provided moderate returns such as in 2014, 2017, and 2010 where annual returns amounted to 13.21%, 13.47%, and 15.3% respectively.
The year 2019 was the strongest year for BSV, returning 4.92% on an annual basis. The poorest year for BSV in the last ten years was 2013, with a yield of 0.17%. Most years the Vanguard Short-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2018, 2016, and 2012, when gains were 1.34%, 1.42%, and 1.98% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWD | $10,000 | $30,746 | 11.40% |
| BSV | $10,000 | $12,785 | 2.27% |
A $10,000 investment in IWD would have resulted in a final balance of $30,746. This is a profit of $20,746 over 11 years and amounts to a compound annual growth rate (CAGR) of 11.40%.
With a $10,000 investment in BSV, the end total would have been $12,785. This equates to a $2,785 profit over 11 years and a compound annual growth rate (CAGR) of 2.27%.
IWD’s CAGR is 9.13 percentage points higher than that of BSV and as a result, would have yielded $17,961 more on a $10,000 investment. Thus, IWD outperformed BSV by 9.13% annually.
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