IWF vs. IEF: What’s The Difference?

The iShares Russell 1000 Growth ETF (IWF) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. IWF is a iShares Large Growth fund and IEF is a iShares Long Government fund. So, what’s the difference between IWF and IEF? And which fund is better?

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

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

Summary

IWF IEF
Name iShares Russell 1000 Growth ETF iShares 7-10 Year Treasury Bond ETF
Category Large Growth Long Government
Issuer iShares iShares
AUM 72.16B 13.44B
Avg. Return 17.72% 5.06%
Div. Yield 0.52% 0.84%
Expense Ratio 0.19% 0.15%

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 7-10 Year Treasury Bond ETF (IEF) is a Long Government fund that is issued by iShares. It currently has 13.44B total assets under management and has yielded an average annual return of 5.06% over the past 10 years. The fund has a dividend yield of 0.84% with an expense ratio of 0.15%.

IWF’s dividend yield is 0.32% lower than that of IEF (0.52% vs. 0.84%). Also, IWF yielded on average 12.66% more per year over the past decade (17.72% vs. 5.06%). The expense ratio of IWF is 0.04 percentage points higher than IEF’s (0.19% vs. 0.15%).

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Fund Composition

Holdings

IWF - Holdings

IWF Holdings Weight
Apple Inc 10.51%
Microsoft Corp 9.85%
Amazon.com Inc 6.63%
Facebook Inc Class A 3.91%
Alphabet Inc Class A 3.2%
Alphabet Inc Class C 3.03%
Tesla Inc 2.45%
NVIDIA Corp 2.14%
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%.

IEF - Holdings

IEF Bond Sectors Weight
AAA 100.0%
Others 0.0%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

IEF’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 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.

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Risk Analysis

IWF IEF
Mean Return 1.48 0.32
R-squared 92.93 77.56
Std. Deviation 14.42 5.42
Alpha 2.16 -1.2
Beta 1.03 1.59
Sharpe Ratio 1.19 0.6
Treynor Ratio 17.1 1.97

The iShares Russell 1000 Growth ETF (IWF) has a Beta of 1.03 with a Mean Return of 1.48 and a Treynor Ratio of 17.1. Its R-squared is 92.93 while IWF’s Standard Deviation is 14.42. Furthermore, the fund has a Sharpe Ratio of 1.19 and a Alpha of 2.16.

The iShares 7-10 Year Treasury Bond ETF (IEF) has a Alpha of -1.2 with a Beta of 1.59 and a Mean Return of 0.32. Its R-squared is 77.56 while IEF’s Sharpe Ratio is 0.6. Furthermore, the fund has a Standard Deviation of 5.42 and a Treynor Ratio of 1.97.

IWF’s Mean Return is 1.16 points higher than that of IEF and its R-squared is 15.37 points higher. With a Standard Deviation of 14.42, IWF is slightly more volatile than IEF. The Alpha and Beta of IWF are 3.36 points higher and 0.56 points lower than IEF’s Alpha and Beta.

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Performance

Annual Returns

IWF vs. IEF - Annual Returns

Year IWF IEF
2020 38.21% 9.84%
2019 36.08% 8.38%
2018 -1.68% 0.82%
2017 29.96% 2.47%
2016 6.92% 1.0%
2015 5.48% 1.55%
2014 12.84% 8.92%
2013 33.19% -6.12%
2012 15.03% 4.06%
2011 2.47% 15.46%
2010 16.47% 9.29%

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 2011 was the strongest year for IEF, returning 15.46% on an annual basis. The poorest year for IEF in the last ten years was 2013, with a yield of -6.12%. Most years the iShares 7-10 Year Treasury Bond ETF has given investors modest returns, such as in 2017, 2012, and 2019, when gains were 2.47%, 4.06%, and 8.38% respectively.

Portfolio Growth

IWF vs. IEF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWF $10,000 $55,920 17.72%
IEF $10,000 $16,936 5.06%

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 IEF, the end total would have been $16,936. This equates to a $6,936 profit over 11 years and a compound annual growth rate (CAGR) of 5.06%.

IWF’s CAGR is 12.66 percentage points higher than that of IEF and as a result, would have yielded $38,984 more on a $10,000 investment. Thus, IWF outperformed IEF by 12.66% annually.


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