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IWD vs. GOVT: What’s The Difference?

The iShares Russell 1000 Value ETF (IWD) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between IWD and GOVT? And which fund is better?

The expense ratio of IWD is 0.14 percentage points higher than GOVT’s (0.19% vs. 0.05%). IWD also has a high exposure to the financial services sector while GOVT is mostly comprised of AAA bonds. Overall, IWD has provided higher returns than GOVT over the past ten years.

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

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Summary

IWDGOVT
NameiShares Russell 1000 Value ETFiShares U.S. Treasury Bond ETF
CategoryLarge ValueIntermediate Government
IssueriSharesiShares
AUM54.1B17.07B
Avg. Return11.40%2.67%
Div. Yield1.57%1.0%
Expense Ratio0.19%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 iShares U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.

IWD’s dividend yield is 0.57% higher than that of GOVT (1.57% vs. 1.0%). Also, IWD yielded on average 8.73% more per year over the past decade (11.40% vs. 2.67%). The expense ratio of IWD is 0.14 percentage points higher than GOVT’s (0.19% vs. 0.05%).

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Fund Composition

Holdings

IWD - Holdings

IWD HoldingsWeight
Berkshire Hathaway Inc Class B2.58%
JPMorgan Chase & Co2.25%
Johnson & Johnson2.24%
UnitedHealth Group Inc1.78%
Procter & Gamble Co1.71%
The Walt Disney Co1.5%
Bank of America Corp1.43%
Comcast Corp Class A1.33%
Exxon Mobil Corp1.2%
Pfizer Inc1.18%

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%.

GOVT - Holdings

GOVT Bond SectorsWeight
AAA100.0%
Others0.0%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

GOVT’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.

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Risk Analysis

IWDGOVT
Mean Return1.030
R-squared92.380
Std. Deviation14.350
Alpha-3.230
Beta1.020
Sharpe Ratio0.810
Treynor Ratio11.060

The iShares Russell 1000 Value ETF (IWD) has a Mean Return of 1.03 with a Sharpe Ratio of 0.81 and a Alpha of -3.23. Its R-squared is 92.38 while IWD’s Standard Deviation is 14.35. Furthermore, the fund has a Beta of 1.02 and a Treynor Ratio of 11.06.

The iShares U.S. Treasury Bond ETF (GOVT) has a Standard Deviation of 0 with a Mean Return of 0 and a Treynor Ratio of 0. Its Alpha is 0 while GOVT’s R-squared is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Beta of 0.

IWD’s Mean Return is 1.03 points higher than that of GOVT and its R-squared is 92.38 points higher. With a Standard Deviation of 14.35, IWD is slightly more volatile than GOVT. The Alpha and Beta of IWD are 3.23 points lower and 1.02 points higher than GOVT’s Alpha and Beta.

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Performance

Annual Returns

IWD vs. GOVT - Annual Returns

YearIWDGOVT
20202.67%7.92%
201926.34%6.71%
2018-8.4%0.74%
201713.47%2.19%
201617.09%0.92%
2015-3.95%0.76%
201413.21%4.99%
201332.18%-2.84%
201217.28%0.0%
20110.21%0.0%
201015.3%0.0%

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 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.

Portfolio Growth

IWD vs. GOVT - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IWD$10,000$22,68911.40%
GOVT$10,000$12,2972.67%

A $10,000 investment in IWD would have resulted in a final balance of $22,689. This is a profit of $12,689 over 8 years and amounts to a compound annual growth rate (CAGR) of 11.40%.

With a $10,000 investment in GOVT, the end total would have been $12,297. This equates to a $2,297 profit over 8 years and a compound annual growth rate (CAGR) of 2.67%.

IWD’s CAGR is 8.73 percentage points higher than that of GOVT and as a result, would have yielded $10,392 more on a $10,000 investment. Thus, IWD outperformed GOVT by 8.73% annually.


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