Skip to content

IWD vs. SHY: What’s The Difference?

The iShares Russell 1000 Value ETF (IWD) and the iShares 1-3 Year Treasury Bond ETF (SHY) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and SHY is a iShares Short Government fund. So, what’s the difference between IWD and SHY? And which fund is better?

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

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

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

IWDSHY
NameiShares Russell 1000 Value ETFiShares 1-3 Year Treasury Bond ETF
CategoryLarge ValueShort Government
IssueriSharesiShares
AUM54.1B19.51B
Avg. Return11.40%1.27%
Div. Yield1.57%0.46%
Expense Ratio0.19%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 1-3 Year Treasury Bond ETF (SHY) is a Short Government fund that is issued by iShares. It currently has 19.51B total assets under management and has yielded an average annual return of 1.27% over the past 10 years. The fund has a dividend yield of 0.46% with an expense ratio of 0.15%.

IWD’s dividend yield is 1.11% higher than that of SHY (1.57% vs. 0.46%). Also, IWD yielded on average 10.13% more per year over the past decade (11.40% vs. 1.27%). The expense ratio of IWD is 0.04 percentage points higher than SHY’s (0.19% vs. 0.15%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

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%.

SHY - Holdings

SHY Bond SectorsWeight
AAA99.67%
Others0.33%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

SHY’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.67%, 0.33%, 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.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

IWDSHY
Mean Return1.030.09
R-squared92.3839.11
Std. Deviation14.350.89
Alpha-3.23-0.03
Beta1.020.18
Sharpe Ratio0.810.54
Treynor Ratio11.062.6

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

The iShares 1-3 Year Treasury Bond ETF (SHY) has a Standard Deviation of 0.89 with a Alpha of -0.03 and a Mean Return of 0.09. Its Beta is 0.18 while SHY’s Treynor Ratio is 2.6. Furthermore, the fund has a R-squared of 39.11 and a Sharpe Ratio of 0.54.

IWD’s Mean Return is 0.94 points higher than that of SHY and its R-squared is 53.27 points higher. With a Standard Deviation of 14.35, IWD is slightly more volatile than SHY. The Alpha and Beta of IWD are 3.20 points lower and 0.84 points higher than SHY’s Alpha and Beta.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

IWD vs. SHY - Annual Returns

YearIWDSHY
20202.67%3.01%
201926.34%3.42%
2018-8.4%1.45%
201713.47%0.27%
201617.09%0.75%
2015-3.95%0.43%
201413.21%0.48%
201332.18%0.23%
201217.28%0.31%
20110.21%1.43%
201015.3%2.23%

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 SHY, returning 3.42% on an annual basis. The poorest year for SHY in the last ten years was 2013, with a yield of 0.23%. Most years the iShares 1-3 Year Treasury Bond ETF has given investors modest returns, such as in 2014, 2016, and 2011, when gains were 0.48%, 0.75%, and 1.43% respectively.

Portfolio Growth

IWD vs. SHY - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IWD$10,000$30,74611.40%
SHY$10,000$11,4861.27%

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 SHY, the end total would have been $11,486. This equates to a $1,486 profit over 11 years and a compound annual growth rate (CAGR) of 1.27%.

IWD’s CAGR is 10.13 percentage points higher than that of SHY and as a result, would have yielded $19,260 more on a $10,000 investment. Thus, IWD outperformed SHY by 10.13% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply

Your email address will not be published.