The iShares Russell 1000 Growth ETF (IWF) and the iShares Preferred and Income Securities ETF (PFF) are both among the Top 100 ETFs. IWF is a iShares Large Growth fund and PFF is a iShares Preferred Stock fund. So, what’s the difference between IWF and PFF? And which fund is better?
The expense ratio of IWF is 0.27 percentage points lower than PFF’s (0.19% vs. 0.46%). IWF also has a higher exposure to the technology sector and a higher standard deviation. Overall, IWF has provided higher returns than PFF over the past ten years.
In this article, we’ll compare IWF vs. PFF. We’ll look at risk metrics and portfolio growth, as well as at their industry exposure and holdings. Moreover, I’ll also discuss IWF’s and PFF’s performance, fund composition, and annual returns and examine how these affect their overall returns.
Summary
| IWF | PFF | |
| Name | iShares Russell 1000 Growth ETF | iShares Preferred and Income Securities ETF |
| Category | Large Growth | Preferred Stock |
| Issuer | iShares | iShares |
| AUM | 72.16B | 19.8B |
| Avg. Return | 17.72% | 6.90% |
| Div. Yield | 0.52% | 4.47% |
| Expense Ratio | 0.19% | 0.46% |
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 Preferred and Income Securities ETF (PFF) is a Preferred Stock fund that is issued by iShares. It currently has 19.8B total assets under management and has yielded an average annual return of 6.90% over the past 10 years. The fund has a dividend yield of 4.47% with an expense ratio of 0.46%.
IWF’s dividend yield is 3.95% lower than that of PFF (0.52% vs. 4.47%). Also, IWF yielded on average 10.83% more per year over the past decade (17.72% vs. 6.90%). The expense ratio of IWF is 0.27 percentage points lower than PFF’s (0.19% vs. 0.46%).
Fund Composition
Industry Exposure
| IWF | PFF | |
| Technology | 39.29% | 0.0% |
| Industrials | 6.19% | 10.27% |
| Energy | 0.28% | 0.0% |
| Communication Services | 12.82% | 0.0% |
| Utilities | 0.03% | 81.81% |
| Healthcare | 9.23% | 3.54% |
| Consumer Defensive | 4.31% | 0.0% |
| Real Estate | 1.85% | 0.65% |
| Financial Services | 7.36% | 0.0% |
| Consumer Cyclical | 17.62% | 0.0% |
| Basic Materials | 1.01% | 3.74% |
The iShares Russell 1000 Growth ETF (IWF) has the most exposure to the Technology sector at 39.29%. This is followed by Consumer Cyclical and Communication Services at 17.62% and 12.82% respectively. Energy (0.28%), Basic Materials (1.01%), and Real Estate (1.85%) only make up 3.14% of the fund’s total assets.
IWF’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Communication Services stocks at 4.31%, 6.19%, 7.36%, 9.23%, and 12.82%.
The iShares Preferred and Income Securities ETF (PFF) has the most exposure to the Utilities sector at 81.81%. This is followed by Industrials and Basic Materials at 10.27% and 3.74% respectively. Financial Services (0.0%), Consumer Defensive (0.0%), and Communication Services (0.0%) only make up 0.00% of the fund’s total assets.
PFF’s mid-section with moderate exposure is comprised of Energy, Technology, Real Estate, Healthcare, and Basic Materials stocks at 0.0%, 0.0%, 0.65%, 3.54%, and 3.74%.
IWF is 39.29% more exposed to the Technology sector than PFF (39.29% vs 0.0%). IWF’s exposure to Consumer Cyclical and Communication Services stocks is 17.62% higher and 12.82% higher respectively (17.62% vs. 0.0% and 12.82% vs. 0.0%). In total, Energy, Basic Materials, and Real Estate also make up 1.25% less of the fund’s holdings compared to PFF (3.14% vs. 4.39%).
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%.
| PFF Holdings | Weight |
| Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A | 2.54% |
| BlackRock Cash Funds Treasury SL Agency | 2.3% |
| Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L- | 1.79% |
| Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L- | 1.49% |
| ArcelorMittal S.A. 5.5% | 1.36% |
| Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A | 1.35% |
| Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B | 1.14% |
| NextEra Energy Inc Unit | 1.12% |
| Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 | 1.08% |
| Avantor Inc Ser A | 0.99% |
PFF’s Top Holdings are Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A, BlackRock Cash Funds Treasury SL Agency, Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-, Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-, and ArcelorMittal S.A. 5.5% at 2.54%, 2.3%, 1.79%, 1.49%, and 1.36%.
Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A (1.35%), Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B (1.14%), and NextEra Energy Inc Unit (1.12%) have a slightly smaller but still significant weight. Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 and Avantor Inc Ser A are also represented in the PFF’s holdings at 1.08% and 0.99%.
Risk Analysis
| IWF | PFF | |
| Mean Return | 1.48 | 0.52 |
| R-squared | 92.93 | 9.39 |
| Std. Deviation | 14.42 | 7.87 |
| Alpha | 2.16 | 3.45 |
| Beta | 1.03 | 0.81 |
| Sharpe Ratio | 1.19 | 0.72 |
| Treynor Ratio | 17.1 | 6.79 |
The iShares Russell 1000 Growth ETF (IWF) has a Sharpe Ratio of 1.19 with a Mean Return of 1.48 and a Alpha of 2.16. Its Standard Deviation is 14.42 while IWF’s Beta is 1.03. Furthermore, the fund has a R-squared of 92.93 and a Treynor Ratio of 17.1.
The iShares Preferred and Income Securities ETF (PFF) has a Sharpe Ratio of 0.72 with a Treynor Ratio of 6.79 and a Alpha of 3.45. Its Beta is 0.81 while PFF’s Standard Deviation is 7.87. Furthermore, the fund has a R-squared of 9.39 and a Mean Return of 0.52.
IWF’s Mean Return is 0.96 points higher than that of PFF and its R-squared is 83.54 points higher. With a Standard Deviation of 14.42, IWF is slightly more volatile than PFF. The Alpha and Beta of IWF are 1.29 points lower and 0.22 points higher than PFF’s Alpha and Beta.
Performance
Annual Returns
| Year | IWF | PFF |
| 2020 | 38.21% | 7.94% |
| 2019 | 36.08% | 15.62% |
| 2018 | -1.68% | -4.77% |
| 2017 | 29.96% | 8.33% |
| 2016 | 6.92% | 1.26% |
| 2015 | 5.48% | 4.62% |
| 2014 | 12.84% | 13.45% |
| 2013 | 33.19% | -0.59% |
| 2012 | 15.03% | 18.25% |
| 2011 | 2.47% | -2.2% |
| 2010 | 16.47% | 13.96% |
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 2012 was the strongest year for PFF, returning 18.25% on an annual basis. The poorest year for PFF in the last ten years was 2018, with a yield of -4.77%. Most years the iShares Preferred and Income Securities ETF has given investors modest returns, such as in 2015, 2020, and 2017, when gains were 4.62%, 7.94%, and 8.33% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWF | $10,000 | $55,920 | 17.72% |
| PFF | $10,000 | $20,272 | 6.90% |
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 PFF, the end total would have been $20,272. This equates to a $10,272 profit over 11 years and a compound annual growth rate (CAGR) of 6.90%.
IWF’s CAGR is 10.83 percentage points higher than that of PFF and as a result, would have yielded $35,648 more on a $10,000 investment. Thus, IWF outperformed PFF by 10.83% annually.
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