The iShares Russell 1000 Value ETF (IWD) and the iShares Preferred and Income Securities ETF (PFF) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and PFF is a iShares Preferred Stock fund. So, what’s the difference between IWD and PFF? And which fund is better?
The expense ratio of IWD is 0.27 percentage points lower than PFF’s (0.19% vs. 0.46%). IWD also has a higher exposure to the financial services sector and a higher standard deviation. Overall, IWD has provided higher returns than PFF over the past ten years.
In this article, we’ll compare IWD vs. PFF. We’ll look at risk metrics and portfolio growth, as well as at their performance and annual returns. Moreover, I’ll also discuss IWD’s and PFF’s industry exposure, holdings, and fund composition and examine how these affect their overall returns.
Summary
| IWD | PFF | |
| Name | iShares Russell 1000 Value ETF | iShares Preferred and Income Securities ETF |
| Category | Large Value | Preferred Stock |
| Issuer | iShares | iShares |
| AUM | 54.1B | 19.8B |
| Avg. Return | 11.40% | 6.90% |
| Div. Yield | 1.57% | 4.47% |
| Expense Ratio | 0.19% | 0.46% |
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 Preferred and Income Securities ETF (PFF) is a Preferred Stock fund that is issued by iShares. It currently has 19.8B total assets under management and has yielded an average annual return of 6.90% over the past 10 years. The fund has a dividend yield of 4.47% with an expense ratio of 0.46%.
IWD’s dividend yield is 2.90% lower than that of PFF (1.57% vs. 4.47%). Also, IWD yielded on average 4.50% more per year over the past decade (11.40% vs. 6.90%). The expense ratio of IWD is 0.27 percentage points lower than PFF’s (0.19% vs. 0.46%).
Fund Composition
Industry Exposure
| IWD | PFF | |
| Technology | 10.28% | 0.0% |
| Industrials | 11.77% | 10.27% |
| Energy | 4.76% | 0.0% |
| Communication Services | 8.67% | 0.0% |
| Utilities | 4.88% | 81.81% |
| Healthcare | 17.78% | 3.54% |
| Consumer Defensive | 7.76% | 0.0% |
| Real Estate | 4.94% | 0.65% |
| Financial Services | 20.43% | 0.0% |
| Consumer Cyclical | 5.62% | 0.0% |
| Basic Materials | 3.1% | 3.74% |
The iShares Russell 1000 Value ETF (IWD) has the most exposure to the Financial Services sector at 20.43%. This is followed by Healthcare and Industrials at 17.78% and 11.77% respectively. Energy (4.76%), Utilities (4.88%), and Real Estate (4.94%) only make up 14.58% of the fund’s total assets.
IWD’s mid-section with moderate exposure is comprised of Consumer Cyclical, Consumer Defensive, Communication Services, Technology, and Industrials stocks at 5.62%, 7.76%, 8.67%, 10.28%, and 11.77%.
The iShares Preferred and Income Securities ETF (PFF) has the most exposure to the Utilities sector at 81.81%. This is followed by Industrials and Basic Materials at 10.27% and 3.74% respectively. Financial Services (0.0%), Consumer Defensive (0.0%), and Communication Services (0.0%) only make up 0.00% of the fund’s total assets.
PFF’s mid-section with moderate exposure is comprised of Energy, Technology, Real Estate, Healthcare, and Basic Materials stocks at 0.0%, 0.0%, 0.65%, 3.54%, and 3.74%.
IWD is 20.43% more exposed to the Financial Services sector than PFF (20.43% vs 0.0%). IWD’s exposure to Healthcare and Industrials stocks is 14.24% higher and 1.50% higher respectively (17.78% vs. 3.54% and 11.77% vs. 10.27%). In total, Energy, Utilities, and Real Estate also make up 67.88% less of the fund’s holdings compared to PFF (14.58% vs. 82.46%).
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%.
| PFF Holdings | Weight |
| Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A | 2.54% |
| BlackRock Cash Funds Treasury SL Agency | 2.3% |
| Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L- | 1.79% |
| Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L- | 1.49% |
| ArcelorMittal S.A. 5.5% | 1.36% |
| Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A | 1.35% |
| Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B | 1.14% |
| NextEra Energy Inc Unit | 1.12% |
| Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 | 1.08% |
| Avantor Inc Ser A | 0.99% |
PFF’s Top Holdings are Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A, BlackRock Cash Funds Treasury SL Agency, Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-, Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-, and ArcelorMittal S.A. 5.5% at 2.54%, 2.3%, 1.79%, 1.49%, and 1.36%.
Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A (1.35%), Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B (1.14%), and NextEra Energy Inc Unit (1.12%) have a slightly smaller but still significant weight. Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 and Avantor Inc Ser A are also represented in the PFF’s holdings at 1.08% and 0.99%.
Risk Analysis
| IWD | PFF | |
| Mean Return | 1.03 | 0.52 |
| R-squared | 92.38 | 9.39 |
| Std. Deviation | 14.35 | 7.87 |
| Alpha | -3.23 | 3.45 |
| Beta | 1.02 | 0.81 |
| Sharpe Ratio | 0.81 | 0.72 |
| Treynor Ratio | 11.06 | 6.79 |
The iShares Russell 1000 Value ETF (IWD) has a Standard Deviation of 14.35 with a Mean Return of 1.03 and a Treynor Ratio of 11.06. Its Sharpe Ratio is 0.81 while IWD’s Beta is 1.02. Furthermore, the fund has a R-squared of 92.38 and a Alpha of -3.23.
The iShares Preferred and Income Securities ETF (PFF) has a Mean Return of 0.52 with a Standard Deviation of 7.87 and a Beta of 0.81. Its R-squared is 9.39 while PFF’s Alpha is 3.45. Furthermore, the fund has a Sharpe Ratio of 0.72 and a Treynor Ratio of 6.79.
IWD’s Mean Return is 0.51 points higher than that of PFF and its R-squared is 82.99 points higher. With a Standard Deviation of 14.35, IWD is slightly more volatile than PFF. The Alpha and Beta of IWD are 6.68 points lower and 0.21 points higher than PFF’s Alpha and Beta.
Performance
Annual Returns
| Year | IWD | PFF |
| 2020 | 2.67% | 7.94% |
| 2019 | 26.34% | 15.62% |
| 2018 | -8.4% | -4.77% |
| 2017 | 13.47% | 8.33% |
| 2016 | 17.09% | 1.26% |
| 2015 | -3.95% | 4.62% |
| 2014 | 13.21% | 13.45% |
| 2013 | 32.18% | -0.59% |
| 2012 | 17.28% | 18.25% |
| 2011 | 0.21% | -2.2% |
| 2010 | 15.3% | 13.96% |
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 2012 was the strongest year for PFF, returning 18.25% on an annual basis. The poorest year for PFF in the last ten years was 2018, with a yield of -4.77%. Most years the iShares Preferred and Income Securities ETF has given investors modest returns, such as in 2015, 2020, and 2017, when gains were 4.62%, 7.94%, and 8.33% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWD | $10,000 | $30,746 | 11.40% |
| PFF | $10,000 | $20,272 | 6.90% |
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 PFF, the end total would have been $20,272. This equates to a $10,272 profit over 11 years and a compound annual growth rate (CAGR) of 6.90%.
IWD’s CAGR is 4.50 percentage points higher than that of PFF and as a result, would have yielded $10,474 more on a $10,000 investment. Thus, IWD outperformed PFF by 4.50% annually.
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