The iShares Russell 1000 Value ETF (IWD) and the iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and IGSB is a iShares Short-Term Bond fund. So, what’s the difference between IWD and IGSB? And which fund is better?
The expense ratio of IWD is 0.13 percentage points higher than IGSB’s (0.19% vs. 0.06%). IWD also has a high exposure to the financial services sector while IGSB is mostly comprised of BBB bonds. Overall, IWD has provided higher returns than IGSB over the past ten years.
In this article, we’ll compare IWD vs. IGSB. We’ll look at fund composition and annual returns, as well as at their industry exposure and performance. Moreover, I’ll also discuss IWD’s and IGSB’s risk metrics, portfolio growth, and holdings and examine how these affect their overall returns.
Summary
| IWD | IGSB | |
| Name | iShares Russell 1000 Value ETF | iShares 1-5 Year Investment Grade Corporate Bond ETF |
| Category | Large Value | Short-Term Bond |
| Issuer | iShares | iShares |
| AUM | 54.1B | 26.63B |
| Avg. Return | 11.40% | 2.51% |
| Div. Yield | 1.57% | 2.02% |
| Expense Ratio | 0.19% | 0.06% |
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 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.
IWD’s dividend yield is 0.45% lower than that of IGSB (1.57% vs. 2.02%). Also, IWD yielded on average 8.89% more per year over the past decade (11.40% vs. 2.51%). The expense ratio of IWD is 0.13 percentage points higher than IGSB’s (0.19% vs. 0.06%).
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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%.
| IGSB Bond Sectors | Weight |
| BBB | 50.48% |
| A | 40.04% |
| AA | 7.46% |
| AAA | 2.21% |
| BB | 0.09% |
| Below B | 0.0% |
| B | 0.0% |
| US Government | 0.0% |
| Others | -0.28% |
IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.
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Risk Analysis
| IWD | IGSB | |
| Mean Return | 1.03 | 0.19 |
| R-squared | 92.38 | 26.13 |
| Std. Deviation | 14.35 | 2 |
| Alpha | -3.23 | 0.69 |
| Beta | 1.02 | 0.34 |
| Sharpe Ratio | 0.81 | 0.82 |
| Treynor Ratio | 11.06 | 4.82 |
The iShares Russell 1000 Value ETF (IWD) has a Alpha of -3.23 with a Mean Return of 1.03 and a Sharpe Ratio of 0.81. Its Beta is 1.02 while IWD’s Treynor Ratio is 11.06. Furthermore, the fund has a Standard Deviation of 14.35 and a R-squared of 92.38.
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Alpha of 0.69 with a R-squared of 26.13 and a Treynor Ratio of 4.82. Its Mean Return is 0.19 while IGSB’s Sharpe Ratio is 0.82. Furthermore, the fund has a Beta of 0.34 and a Standard Deviation of 2.
IWD’s Mean Return is 0.84 points higher than that of IGSB and its R-squared is 66.25 points higher. With a Standard Deviation of 14.35, IWD is slightly more volatile than IGSB. The Alpha and Beta of IWD are 3.92 points lower and 0.68 points higher than IGSB’s Alpha and Beta.
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Performance
Annual Returns
| Year | IWD | IGSB |
| 2020 | 2.67% | 5.26% |
| 2019 | 26.34% | 7.01% |
| 2018 | -8.4% | 1.34% |
| 2017 | 13.47% | 1.41% |
| 2016 | 17.09% | 1.77% |
| 2015 | -3.95% | 0.7% |
| 2014 | 13.21% | 0.74% |
| 2013 | 32.18% | 1.03% |
| 2012 | 17.28% | 3.28% |
| 2011 | 0.21% | 1.34% |
| 2010 | 15.3% | 3.69% |
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 IGSB, returning 7.01% on an annual basis. The poorest year for IGSB in the last ten years was 2015, with a yield of 0.7%. Most years the iShares 1-5 Year Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2011, 2017, and 2016, when gains were 1.34%, 1.41%, and 1.77% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWD | $10,000 | $30,746 | 11.40% |
| IGSB | $10,000 | $13,103 | 2.51% |
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 IGSB, the end total would have been $13,103. This equates to a $3,103 profit over 11 years and a compound annual growth rate (CAGR) of 2.51%.
IWD’s CAGR is 8.89 percentage points higher than that of IGSB and as a result, would have yielded $17,643 more on a $10,000 investment. Thus, IWD outperformed IGSB by 8.89% annually.
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