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.
Summary
| IWD | SHY | |
| Name | iShares Russell 1000 Value ETF | iShares 1-3 Year Treasury Bond ETF |
| Category | Large Value | Short Government |
| Issuer | iShares | iShares |
| AUM | 54.1B | 19.51B |
| Avg. Return | 11.40% | 1.27% |
| Div. Yield | 1.57% | 0.46% |
| 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 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%).
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%.
| SHY Bond Sectors | Weight |
| AAA | 99.67% |
| Others | 0.33% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
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.
Risk Analysis
| IWD | SHY | |
| Mean Return | 1.03 | 0.09 |
| R-squared | 92.38 | 39.11 |
| Std. Deviation | 14.35 | 0.89 |
| Alpha | -3.23 | -0.03 |
| Beta | 1.02 | 0.18 |
| Sharpe Ratio | 0.81 | 0.54 |
| Treynor Ratio | 11.06 | 2.6 |
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.
Performance
Annual Returns
| Year | IWD | SHY |
| 2020 | 2.67% | 3.01% |
| 2019 | 26.34% | 3.42% |
| 2018 | -8.4% | 1.45% |
| 2017 | 13.47% | 0.27% |
| 2016 | 17.09% | 0.75% |
| 2015 | -3.95% | 0.43% |
| 2014 | 13.21% | 0.48% |
| 2013 | 32.18% | 0.23% |
| 2012 | 17.28% | 0.31% |
| 2011 | 0.21% | 1.43% |
| 2010 | 15.3% | 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
| Fund | Initial Balance | Final Balance | CAGR |
| IWD | $10,000 | $30,746 | 11.40% |
| SHY | $10,000 | $11,486 | 1.27% |
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.
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