IWF vs. TLT: What’s The Difference?

The iShares Russell 1000 Growth ETF (IWF) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. IWF is a iShares Large Growth fund and TLT is a iShares Long Government fund. So, what’s the difference between IWF and TLT? And which fund is better?

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

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

Summary

IWF TLT
Name iShares Russell 1000 Growth ETF iShares 20+ Year Treasury Bond ETF
Category Large Growth Long Government
Issuer iShares iShares
AUM 72.16B 15.15B
Avg. Return 17.72% 9.00%
Div. Yield 0.52% 1.5%
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 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.

IWF’s dividend yield is 0.98% lower than that of TLT (0.52% vs. 1.5%). Also, IWF yielded on average 8.73% more per year over the past decade (17.72% vs. 9.00%). The expense ratio of IWF is 0.04 percentage points higher than TLT’s (0.19% vs. 0.15%).

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%.

TLT - Holdings

TLT Bond Sectors Weight
AAA 100.0%
Others 0.0%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

TLT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 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 TLT
Mean Return 1.48 0.63
R-squared 92.93 68.76
Std. Deviation 14.42 12.76
Alpha 2.16 -2.83
Beta 1.03 3.54
Sharpe Ratio 1.19 0.55
Treynor Ratio 17.1 1.82

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

The iShares 20+ Year Treasury Bond ETF (TLT) has a Mean Return of 0.63 with a Treynor Ratio of 1.82 and a Alpha of -2.83. Its R-squared is 68.76 while TLT’s Sharpe Ratio is 0.55. Furthermore, the fund has a Standard Deviation of 12.76 and a Beta of 3.54.

IWF’s Mean Return is 0.85 points higher than that of TLT and its R-squared is 24.17 points higher. With a Standard Deviation of 14.42, IWF is slightly more volatile than TLT. The Alpha and Beta of IWF are 4.99 points higher and 2.51 points lower than TLT’s Alpha and Beta.

Performance

Annual Returns

IWF vs. TLT - Annual Returns

Year IWF TLT
2020 38.21% 17.92%
2019 36.08% 14.93%
2018 -1.68% -2.07%
2017 29.96% 8.92%
2016 6.92% 1.36%
2015 5.48% -1.65%
2014 12.84% 27.35%
2013 33.19% -13.91%
2012 15.03% 3.25%
2011 2.47% 33.6%
2010 16.47% 9.25%

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 TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% respectively.

Portfolio Growth

IWF vs. TLT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWF $10,000 $55,920 17.72%
TLT $10,000 $23,809 9.00%

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 TLT, the end total would have been $23,809. This equates to a $13,809 profit over 11 years and a compound annual growth rate (CAGR) of 9.00%.

IWF’s CAGR is 8.73 percentage points higher than that of TLT and as a result, would have yielded $32,111 more on a $10,000 investment. Thus, IWF outperformed TLT by 8.73% annually.


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