IWD vs. IEF: What’s The Difference?

The iShares Russell 1000 Value ETF (IWD) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and IEF is a iShares Long Government fund. So, what’s the difference between IWD and IEF? And which fund is better?

The expense ratio of IWD is 0.04 percentage points higher than IEF’s (0.19% vs. 0.15%). IWD also has a high exposure to the financial services sector while IEF is mostly comprised of AAA bonds. Overall, IWD has provided higher returns than IEF over the past ten years.

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

Summary

IWD IEF
Name iShares Russell 1000 Value ETF iShares 7-10 Year Treasury Bond ETF
Category Large Value Long Government
Issuer iShares iShares
AUM 54.1B 13.44B
Avg. Return 11.40% 5.06%
Div. Yield 1.57% 0.84%
Expense Ratio 0.19% 0.15%

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 7-10 Year Treasury Bond ETF (IEF) is a Long Government fund that is issued by iShares. It currently has 13.44B total assets under management and has yielded an average annual return of 5.06% over the past 10 years. The fund has a dividend yield of 0.84% with an expense ratio of 0.15%.

IWD’s dividend yield is 0.73% higher than that of IEF (1.57% vs. 0.84%). Also, IWD yielded on average 6.34% more per year over the past decade (11.40% vs. 5.06%). The expense ratio of IWD is 0.04 percentage points higher than IEF’s (0.19% vs. 0.15%).

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Fund Composition

Holdings

IWD - 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%.

IEF - Holdings

IEF 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%

IEF’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

IWD IEF
Mean Return 1.03 0.32
R-squared 92.38 77.56
Std. Deviation 14.35 5.42
Alpha -3.23 -1.2
Beta 1.02 1.59
Sharpe Ratio 0.81 0.6
Treynor Ratio 11.06 1.97

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

The iShares 7-10 Year Treasury Bond ETF (IEF) has a Beta of 1.59 with a Sharpe Ratio of 0.6 and a Alpha of -1.2. Its R-squared is 77.56 while IEF’s Mean Return is 0.32. Furthermore, the fund has a Treynor Ratio of 1.97 and a Standard Deviation of 5.42.

IWD’s Mean Return is 0.71 points higher than that of IEF and its R-squared is 14.82 points higher. With a Standard Deviation of 14.35, IWD is slightly more volatile than IEF. The Alpha and Beta of IWD are 2.03 points lower and 0.57 points lower than IEF’s Alpha and Beta.

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Performance

Annual Returns

IWD vs. IEF - Annual Returns

Year IWD IEF
2020 2.67% 9.84%
2019 26.34% 8.38%
2018 -8.4% 0.82%
2017 13.47% 2.47%
2016 17.09% 1.0%
2015 -3.95% 1.55%
2014 13.21% 8.92%
2013 32.18% -6.12%
2012 17.28% 4.06%
2011 0.21% 15.46%
2010 15.3% 9.29%

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 2011 was the strongest year for IEF, returning 15.46% on an annual basis. The poorest year for IEF in the last ten years was 2013, with a yield of -6.12%. Most years the iShares 7-10 Year Treasury Bond ETF has given investors modest returns, such as in 2017, 2012, and 2019, when gains were 2.47%, 4.06%, and 8.38% respectively.

Portfolio Growth

IWD vs. IEF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWD $10,000 $30,746 11.40%
IEF $10,000 $16,936 5.06%

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 IEF, the end total would have been $16,936. This equates to a $6,936 profit over 11 years and a compound annual growth rate (CAGR) of 5.06%.

IWD’s CAGR is 6.34 percentage points higher than that of IEF and as a result, would have yielded $13,810 more on a $10,000 investment. Thus, IWD outperformed IEF by 6.34% annually.


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