IWF vs. IGSB: What’s The Difference?

The iShares Russell 1000 Growth ETF (IWF) and the iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) are both among the Top 100 ETFs. IWF is a iShares Large Growth fund and IGSB is a iShares Short-Term Bond fund. So, what’s the difference between IWF and IGSB? And which fund is better?

The expense ratio of IWF is 0.13 percentage points higher than IGSB’s (0.19% vs. 0.06%). IWF also has a high exposure to the technology sector while IGSB is mostly comprised of BBB bonds. Overall, IWF has provided higher returns than IGSB over the past ten years.

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

Summary

IWF IGSB
Name iShares Russell 1000 Growth ETF iShares 1-5 Year Investment Grade Corporate Bond ETF
Category Large Growth Short-Term Bond
Issuer iShares iShares
AUM 72.16B 26.63B
Avg. Return 17.72% 2.51%
Div. Yield 0.52% 2.02%
Expense Ratio 0.19% 0.06%

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 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.

IWF’s dividend yield is 1.50% lower than that of IGSB (0.52% vs. 2.02%). Also, IWF yielded on average 15.22% more per year over the past decade (17.72% vs. 2.51%). The expense ratio of IWF is 0.13 percentage points higher than IGSB’s (0.19% vs. 0.06%).

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%.

IGSB - Holdings

IGSB Bond Sectors Weight
BBB 50.48%
A 40.04%
AA 7.46%
AAA 2.21%
BB 0.09%
Below B 0.0%
B 0.0%
US Government 0.0%
Others -0.28%

IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.

Risk Analysis

IWF IGSB
Mean Return 1.48 0.19
R-squared 92.93 26.13
Std. Deviation 14.42 2
Alpha 2.16 0.69
Beta 1.03 0.34
Sharpe Ratio 1.19 0.82
Treynor Ratio 17.1 4.82

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

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Alpha of 0.69 with a R-squared of 26.13 and a Mean Return of 0.19. Its Beta is 0.34 while IGSB’s Standard Deviation is 2. Furthermore, the fund has a Sharpe Ratio of 0.82 and a Treynor Ratio of 4.82.

IWF’s Mean Return is 1.29 points higher than that of IGSB and its R-squared is 66.80 points higher. With a Standard Deviation of 14.42, IWF is slightly more volatile than IGSB. The Alpha and Beta of IWF are 1.47 points higher and 0.69 points higher than IGSB’s Alpha and Beta.

Performance

Annual Returns

IWF vs. IGSB - Annual Returns

Year IWF IGSB
2020 38.21% 5.26%
2019 36.08% 7.01%
2018 -1.68% 1.34%
2017 29.96% 1.41%
2016 6.92% 1.77%
2015 5.48% 0.7%
2014 12.84% 0.74%
2013 33.19% 1.03%
2012 15.03% 3.28%
2011 2.47% 1.34%
2010 16.47% 3.69%

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 IGSB, returning 7.01% on an annual basis. The poorest year for IGSB in the last ten years was 2015, with a yield of 0.7%. Most years the iShares 1-5 Year Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2011, 2017, and 2016, when gains were 1.34%, 1.41%, and 1.77% respectively.

Portfolio Growth

IWF vs. IGSB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWF $10,000 $55,920 17.72%
IGSB $10,000 $13,103 2.51%

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 IGSB, the end total would have been $13,103. This equates to a $3,103 profit over 11 years and a compound annual growth rate (CAGR) of 2.51%.

IWF’s CAGR is 15.22 percentage points higher than that of IGSB and as a result, would have yielded $42,817 more on a $10,000 investment. Thus, IWF outperformed IGSB by 15.22% annually.


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