The iShares Russell 1000 Growth ETF (IWF) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) are both among the Top 100 ETFs. IWF is a iShares Large Growth fund and HYG is a iShares High Yield Bond fund. So, what’s the difference between IWF and HYG? And which fund is better?
The expense ratio of IWF is 0.29 percentage points lower than HYG’s (0.19% vs. 0.48%). IWF also has a high exposure to the technology sector while HYG is mostly comprised of BB bonds. Overall, IWF has provided higher returns than HYG over the past ten years.
In this article, we’ll compare IWF vs. HYG. We’ll look at fund composition and industry exposure, as well as at their risk metrics and portfolio growth. Moreover, I’ll also discuss IWF’s and HYG’s annual returns, performance, and holdings and examine how these affect their overall returns.
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|Name||iShares Russell 1000 Growth ETF||iShares iBoxx $ High Yield Corporate Bond ETF|
|Category||Large Growth||High Yield Bond|
The iShares Russell 1000 Growth ETF (IWF) is a Large Growth fund that is issued by iShares. It currently has 72.16B total assets under management and has yielded an average annual return of 17.72% over the past 10 years. The fund has a dividend yield of 0.52% with an expense ratio of 0.19%.
The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) is a High Yield Bond fund that is issued by iShares. It currently has 20.03B total assets under management and has yielded an average annual return of 6.42% over the past 10 years. The fund has a dividend yield of 4.44% with an expense ratio of 0.48%.
IWF’s dividend yield is 3.92% lower than that of HYG (0.52% vs. 4.44%). Also, IWF yielded on average 11.31% more per year over the past decade (17.72% vs. 6.42%). The expense ratio of IWF is 0.29 percentage points lower than HYG’s (0.19% vs. 0.48%).
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|Facebook Inc Class A||3.91%|
|Alphabet Inc Class A||3.2%|
|Alphabet Inc Class C||3.03%|
|Visa Inc Class A||1.91%|
|The Home Depot Inc||1.62%|
IWF’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.51%, 9.85%, 6.63%, 3.91%, and 3.2%.
Alphabet Inc Class C (3.03%), Tesla Inc (2.45%), and NVIDIA Corp (2.14%) have a slightly smaller but still significant weight. Visa Inc Class A and The Home Depot Inc are also represented in the IWF’s holdings at 1.91% and 1.62%.
|HYG Bond Sectors||Weight|
HYG’s Top Bond Sectors are ratings of BB, B, Below B, BBB, and AAA at 56.53%, 31.27%, 11.4%, 0.61%, and 0.28%. The fund is less weighted towards A (0.0%), AA (0.0%), and US Government (0.0%) rated bonds.
The iShares Russell 1000 Growth ETF (IWF) has a Sharpe Ratio of 1.19 with a Mean Return of 1.48 and a Treynor Ratio of 17.1. Its Alpha is 2.16 while IWF’s R-squared is 92.93. Furthermore, the fund has a Standard Deviation of 14.42 and a Beta of 1.03.
The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) has a Beta of 0.48 with a Alpha of 3.58 and a R-squared of 4.1. Its Mean Return is 0.46 while HYG’s Sharpe Ratio is 0.7. Furthermore, the fund has a Standard Deviation of 6.96 and a Treynor Ratio of 10.01.
IWF’s Mean Return is 1.02 points higher than that of HYG and its R-squared is 88.83 points higher. With a Standard Deviation of 14.42, IWF is slightly more volatile than HYG. The Alpha and Beta of IWF are 1.42 points lower and 0.55 points higher than HYG’s Alpha and Beta.
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IWF had its best year in 2020 with an annual return of 38.21%. IWF’s worst year over the past decade yielded -1.68% and occurred in 2018. In most years the iShares Russell 1000 Growth ETF provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 12.84%, 15.03%, and 16.47% respectively.
The year 2019 was the strongest year for HYG, returning 14.23% on an annual basis. The poorest year for HYG in the last ten years was 2015, with a yield of -5.55%. Most years the iShares iBoxx $ High Yield Corporate Bond ETF has given investors modest returns, such as in 2011, 2013, and 2017, when gains were 5.89%, 5.9%, and 6.09% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IWF would have resulted in a final balance of $55,920. This is a profit of $45,920 over 11 years and amounts to a compound annual growth rate (CAGR) of 17.72%.
With a $10,000 investment in HYG, the end total would have been $19,427. This equates to a $9,427 profit over 11 years and a compound annual growth rate (CAGR) of 6.42%.
IWF’s CAGR is 11.31 percentage points higher than that of HYG and as a result, would have yielded $36,493 more on a $10,000 investment. Thus, IWF outperformed HYG by 11.31% annually.
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