IWF vs. SHY: What’s The Difference?

The iShares Russell 1000 Growth ETF (IWF) and the iShares 1-3 Year Treasury Bond ETF (SHY) are both among the Top 100 ETFs. IWF is a iShares Large Growth fund and SHY is a iShares Short Government fund. So, what’s the difference between IWF and SHY? And which fund is better?

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

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

Summary

IWF SHY
Name iShares Russell 1000 Growth ETF iShares 1-3 Year Treasury Bond ETF
Category Large Growth Short Government
Issuer iShares iShares
AUM 72.16B 19.51B
Avg. Return 17.72% 1.27%
Div. Yield 0.52% 0.46%
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 1-3 Year Treasury Bond ETF (SHY) is a Short Government fund that is issued by iShares. It currently has 19.51B total assets under management and has yielded an average annual return of 1.27% over the past 10 years. The fund has a dividend yield of 0.46% with an expense ratio of 0.15%.

IWF’s dividend yield is 0.06% higher than that of SHY (0.52% vs. 0.46%). Also, IWF yielded on average 16.45% more per year over the past decade (17.72% vs. 1.27%). The expense ratio of IWF is 0.04 percentage points higher than SHY’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%.

SHY - Holdings

SHY Bond Sectors Weight
AAA 99.67%
Others 0.33%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

SHY’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.67%, 0.33%, 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 SHY
Mean Return 1.48 0.09
R-squared 92.93 39.11
Std. Deviation 14.42 0.89
Alpha 2.16 -0.03
Beta 1.03 0.18
Sharpe Ratio 1.19 0.54
Treynor Ratio 17.1 2.6

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

The iShares 1-3 Year Treasury Bond ETF (SHY) has a Mean Return of 0.09 with a Standard Deviation of 0.89 and a Beta of 0.18. Its Sharpe Ratio is 0.54 while SHY’s Treynor Ratio is 2.6. Furthermore, the fund has a Alpha of -0.03 and a R-squared of 39.11.

IWF’s Mean Return is 1.39 points higher than that of SHY and its R-squared is 53.82 points higher. With a Standard Deviation of 14.42, IWF is slightly more volatile than SHY. The Alpha and Beta of IWF are 2.19 points higher and 0.85 points higher than SHY’s Alpha and Beta.

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Performance

Annual Returns

IWF vs. SHY - Annual Returns

Year IWF SHY
2020 38.21% 3.01%
2019 36.08% 3.42%
2018 -1.68% 1.45%
2017 29.96% 0.27%
2016 6.92% 0.75%
2015 5.48% 0.43%
2014 12.84% 0.48%
2013 33.19% 0.23%
2012 15.03% 0.31%
2011 2.47% 1.43%
2010 16.47% 2.23%

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 SHY, returning 3.42% on an annual basis. The poorest year for SHY in the last ten years was 2013, with a yield of 0.23%. Most years the iShares 1-3 Year Treasury Bond ETF has given investors modest returns, such as in 2014, 2016, and 2011, when gains were 0.48%, 0.75%, and 1.43% respectively.

Portfolio Growth

IWF vs. SHY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWF $10,000 $55,920 17.72%
SHY $10,000 $11,486 1.27%

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 SHY, the end total would have been $11,486. This equates to a $1,486 profit over 11 years and a compound annual growth rate (CAGR) of 1.27%.

IWF’s CAGR is 16.45 percentage points higher than that of SHY and as a result, would have yielded $44,434 more on a $10,000 investment. Thus, IWF outperformed SHY by 16.45% annually.


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