The iShares Russell 2000 ETF (IWM) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between IWM and BIV? And which fund is better?
The expense ratio of IWM is 0.14 percentage points higher than BIV’s (0.19% vs. 0.05%). IWM also has a high exposure to the healthcare sector while BIV is mostly comprised of AAA bonds. Overall, IWM has provided higher returns than BIV over the past ten years.
In this article, we’ll compare IWM vs. BIV. We’ll look at portfolio growth and risk metrics, as well as at their performance and holdings. Moreover, I’ll also discuss IWM’s and BIV’s annual returns, fund composition, and industry exposure and examine how these affect their overall returns.
|Name||iShares Russell 2000 ETF||Vanguard Intermediate-Term Bond Index Fund ETF Shares|
|Category||Small Blend||Intermediate-Term Bond|
The iShares Russell 2000 ETF (IWM) is a Small Blend fund that is issued by iShares. It currently has 66.48B total assets under management and has yielded an average annual return of 13.52% over the past 10 years. The fund has a dividend yield of 0.86% with an expense ratio of 0.19%.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.
IWM’s dividend yield is 1.20% lower than that of BIV (0.86% vs. 2.06%). Also, IWM yielded on average 8.21% more per year over the past decade (13.52% vs. 5.31%). The expense ratio of IWM is 0.14 percentage points higher than BIV’s (0.19% vs. 0.05%).
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|AMC Entertainment Holdings Inc Class A||0.52%|
|Intellia Therapeutics Inc||0.33%|
|BlackRock Cash Funds Treasury SL Agency||0.29%|
|Tenet Healthcare Corp||0.26%|
|Lattice Semiconductor Corp||0.26%|
|Tetra Tech Inc||0.25%|
|EastGroup Properties Inc||0.24%|
|Arrowhead Pharmaceuticals Inc||0.24%|
IWM’s Top Holdings are AMC Entertainment Holdings Inc Class A, Intellia Therapeutics Inc, Crocs Inc, BlackRock Cash Funds Treasury SL Agency, and Tenet Healthcare Corp at 0.52%, 0.33%, 0.3%, 0.29%, and 0.26%.
Lattice Semiconductor Corp (0.26%), Tetra Tech Inc (0.25%), and II-VI Inc (0.25%) have a slightly smaller but still significant weight. EastGroup Properties Inc and Arrowhead Pharmaceuticals Inc are also represented in the IWM’s holdings at 0.24% and 0.24%.
|BIV Bond Sectors||Weight|
BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.
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The iShares Russell 2000 ETF (IWM) has a Treynor Ratio of 9.56 with a Standard Deviation of 18.87 and a Sharpe Ratio of 0.68. Its Mean Return is 1.12 while IWM’s Alpha is -5.12. Furthermore, the fund has a Beta of 1.23 and a R-squared of 77.73.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Treynor Ratio of 2.72 with a Mean Return of 0.35 and a Alpha of -0.07. Its Beta is 1.33 while BIV’s Sharpe Ratio is 0.89. Furthermore, the fund has a R-squared of 95.12 and a Standard Deviation of 4.09.
IWM’s Mean Return is 0.77 points higher than that of BIV and its R-squared is 17.39 points lower. With a Standard Deviation of 18.87, IWM is slightly more volatile than BIV. The Alpha and Beta of IWM are 5.05 points lower and 0.10 points lower than BIV’s Alpha and Beta.
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IWM had its best year in 2013 with an annual return of 38.85%. IWM’s worst year over the past decade yielded -11.02% and occurred in 2018. In most years the iShares Russell 2000 ETF provided moderate returns such as in 2017, 2012, and 2020 where annual returns amounted to 14.66%, 16.39%, and 19.89% respectively.
The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IWM would have resulted in a final balance of $36,686. This is a profit of $26,686 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.52%.
With a $10,000 investment in BIV, the end total would have been $17,492. This equates to a $7,492 profit over 11 years and a compound annual growth rate (CAGR) of 5.31%.
IWM’s CAGR is 8.21 percentage points higher than that of BIV and as a result, would have yielded $19,194 more on a $10,000 investment. Thus, IWM outperformed BIV by 8.21% annually.
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