The iShares Russell 1000 Growth ETF (IWF) and the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) are both among the Top 100 ETFs. IWF is a iShares Large Growth fund and LQD is a iShares Corporate Bond fund. So, what’s the difference between IWF and LQD? And which fund is better?
The expense ratio of IWF is 0.05 percentage points higher than LQD’s (0.19% vs. 0.14%). IWF also has a high exposure to the technology sector while LQD is mostly comprised of BBB bonds. Overall, IWF has provided higher returns than LQD over the past ten years.
In this article, we’ll compare IWF vs. LQD. We’ll look at fund composition and annual returns, as well as at their industry exposure and performance. Moreover, I’ll also discuss IWF’s and LQD’s risk metrics, portfolio growth, and holdings and examine how these affect their overall returns.
|Name||iShares Russell 1000 Growth ETF||iShares iBoxx $ Investment Grade Corporate Bond ETF|
|Category||Large Growth||Corporate 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 $ Investment Grade Corporate Bond ETF (LQD) is a Corporate Bond fund that is issued by iShares. It currently has 40.23B total assets under management and has yielded an average annual return of 6.58% over the past 10 years. The fund has a dividend yield of 2.48% with an expense ratio of 0.14%.
IWF’s dividend yield is 1.96% lower than that of LQD (0.52% vs. 2.48%). Also, IWF yielded on average 11.15% more per year over the past decade (17.72% vs. 6.58%). The expense ratio of IWF is 0.05 percentage points higher than LQD’s (0.19% vs. 0.14%).
|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%.
|LQD Bond Sectors||Weight|
LQD’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.92%, 37.97%, 8.49%, 2.7%, and 0.05%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.
The iShares Russell 1000 Growth ETF (IWF) has a Beta of 1.03 with a Alpha of 2.16 and a Mean Return of 1.48. Its Sharpe Ratio is 1.19 while IWF’s R-squared is 92.93. Furthermore, the fund has a Standard Deviation of 14.42 and a Treynor Ratio of 17.1.
The iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) has a Alpha of 0.52 with a Beta of 1.62 and a Sharpe Ratio of 0.85. Its Standard Deviation is 5.94 while LQD’s Mean Return is 0.47. Furthermore, the fund has a Treynor Ratio of 3.08 and a R-squared of 66.93.
IWF’s Mean Return is 1.01 points higher than that of LQD and its R-squared is 26.00 points higher. With a Standard Deviation of 14.42, IWF is slightly more volatile than LQD. The Alpha and Beta of IWF are 1.64 points higher and 0.59 points lower than LQD’s Alpha and Beta.
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 LQD, returning 17.13% on an annual basis. The poorest year for LQD in the last ten years was 2018, with a yield of -3.76%. Most years the iShares iBoxx $ Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2017, 2014, and 2011, when gains were 7.16%, 8.57%, and 8.89% 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 LQD, the end total would have been $19,776. This equates to a $9,776 profit over 11 years and a compound annual growth rate (CAGR) of 6.58%.
IWF’s CAGR is 11.15 percentage points higher than that of LQD and as a result, would have yielded $36,144 more on a $10,000 investment. Thus, IWF outperformed LQD by 11.15% annually.
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