The iShares Russell 1000 Growth ETF (IWF) and the iShares TIPS Bond ETF (TIP) are both among the Top 100 ETFs. IWF is a iShares Large Growth fund and TIP is a iShares Inflation-Protected Bond fund. So, what’s the difference between IWF and TIP? And which fund is better?
IWF and TIP have the same expense ratio: 0.19%. IWF also has a high exposure to the technology sector while TIP is mostly comprised of AAA bonds. Overall, IWF has provided higher returns than TIP over the past ten years.
In this article, we’ll compare IWF vs. TIP. We’ll look at portfolio growth and risk metrics, as well as at their holdings and annual returns. Moreover, I’ll also discuss IWF’s and TIP’s performance, fund composition, and industry exposure and examine how these affect their overall returns.
Summary
| IWF | TIP | |
| Name | iShares Russell 1000 Growth ETF | iShares TIPS Bond ETF |
| Category | Large Growth | Inflation-Protected Bond |
| Issuer | iShares | iShares |
| AUM | 72.16B | 28.3B |
| Avg. Return | 17.72% | 4.07% |
| Div. Yield | 0.52% | 1.87% |
| Expense Ratio | 0.19% | 0.19% |
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 TIPS Bond ETF (TIP) is a Inflation-Protected Bond fund that is issued by iShares. It currently has 28.3B total assets under management and has yielded an average annual return of 4.07% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.19%.
IWF’s dividend yield is 1.35% lower than that of TIP (0.52% vs. 1.87%). Also, IWF yielded on average 13.65% more per year over the past decade (17.72% vs. 4.07%). IWF and TIP have the same expense ratio: 0.19%.
Fund Composition
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%.
| TIP Bond Sectors | Weight |
| AAA | 99.31% |
| Others | 0.69% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
TIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.31%, 0.69%, 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.
Risk Analysis
| IWF | TIP | |
| Mean Return | 1.48 | 0.28 |
| R-squared | 92.93 | 66.57 |
| Std. Deviation | 14.42 | 4.33 |
| Alpha | 2.16 | -0.58 |
| Beta | 1.03 | 1.18 |
| Sharpe Ratio | 1.19 | 0.62 |
| Treynor Ratio | 17.1 | 2.24 |
The iShares Russell 1000 Growth ETF (IWF) has a Alpha of 2.16 with a Mean Return of 1.48 and a R-squared of 92.93. Its Sharpe Ratio is 1.19 while IWF’s Treynor Ratio is 17.1. Furthermore, the fund has a Beta of 1.03 and a Standard Deviation of 14.42.
The iShares TIPS Bond ETF (TIP) has a R-squared of 66.57 with a Treynor Ratio of 2.24 and a Alpha of -0.58. Its Beta is 1.18 while TIP’s Standard Deviation is 4.33. Furthermore, the fund has a Sharpe Ratio of 0.62 and a Mean Return of 0.28.
IWF’s Mean Return is 1.20 points higher than that of TIP and its R-squared is 26.36 points higher. With a Standard Deviation of 14.42, IWF is slightly more volatile than TIP. The Alpha and Beta of IWF are 2.74 points higher and 0.15 points lower than TIP’s Alpha and Beta.
Performance
Annual Returns
| Year | IWF | TIP |
| 2020 | 38.21% | 10.91% |
| 2019 | 36.08% | 8.28% |
| 2018 | -1.68% | -1.43% |
| 2017 | 29.96% | 2.92% |
| 2016 | 6.92% | 4.56% |
| 2015 | 5.48% | -1.59% |
| 2014 | 12.84% | 3.49% |
| 2013 | 33.19% | -8.65% |
| 2012 | 15.03% | 6.8% |
| 2011 | 2.47% | 13.4% |
| 2010 | 16.47% | 6.1% |
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 TIP, returning 13.4% on an annual basis. The poorest year for TIP in the last ten years was 2013, with a yield of -8.65%. Most years the iShares TIPS Bond ETF has given investors modest returns, such as in 2014, 2016, and 2010, when gains were 3.49%, 4.56%, and 6.1% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWF | $10,000 | $55,920 | 17.72% |
| TIP | $10,000 | $15,229 | 4.07% |
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 TIP, the end total would have been $15,229. This equates to a $5,229 profit over 11 years and a compound annual growth rate (CAGR) of 4.07%.
IWF’s CAGR is 13.65 percentage points higher than that of TIP and as a result, would have yielded $40,691 more on a $10,000 investment. Thus, IWF outperformed TIP by 13.65% annually.
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