The iShares Russell 2000 ETF (IWM) and the Vanguard Short-Term Bond Index Fund ETF Shares (BSV) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and BSV is a Vanguard Short-Term Bond fund. So, what’s the difference between IWM and BSV? And which fund is better?
The expense ratio of IWM is 0.14 percentage points higher than BSV’s (0.19% vs. 0.05%). IWM also has a high exposure to the healthcare sector while BSV is mostly comprised of AAA bonds. Overall, IWM has provided higher returns than BSV over the past ten years.
In this article, we’ll compare IWM vs. BSV. We’ll look at annual returns and risk metrics, as well as at their performance and portfolio growth. Moreover, I’ll also discuss IWM’s and BSV’s industry exposure, holdings, and fund composition and examine how these affect their overall returns.
Summary
| IWM | BSV | |
| Name | iShares Russell 2000 ETF | Vanguard Short-Term Bond Index Fund ETF Shares |
| Category | Small Blend | Short-Term Bond |
| Issuer | iShares | Vanguard |
| AUM | 66.48B | 67.71B |
| Avg. Return | 13.52% | 2.27% |
| Div. Yield | 0.86% | 1.48% |
| Expense Ratio | 0.19% | 0.05% |
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 Short-Term Bond Index Fund ETF Shares (BSV) is a Short-Term Bond fund that is issued by Vanguard. It currently has 67.71B total assets under management and has yielded an average annual return of 2.27% over the past 10 years. The fund has a dividend yield of 1.48% with an expense ratio of 0.05%.
IWM’s dividend yield is 0.62% lower than that of BSV (0.86% vs. 1.48%). Also, IWM yielded on average 11.25% more per year over the past decade (13.52% vs. 2.27%). The expense ratio of IWM is 0.14 percentage points higher than BSV’s (0.19% vs. 0.05%).
Fund Composition
Holdings
| IWM Holdings | Weight |
| AMC Entertainment Holdings Inc Class A | 0.52% |
| Intellia Therapeutics Inc | 0.33% |
| Crocs Inc | 0.3% |
| BlackRock Cash Funds Treasury SL Agency | 0.29% |
| Tenet Healthcare Corp | 0.26% |
| Lattice Semiconductor Corp | 0.26% |
| Tetra Tech Inc | 0.25% |
| II-VI 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%.
| BSV Bond Sectors | Weight |
| AAA | 71.65% |
| BBB | 13.08% |
| A | 11.95% |
| AA | 3.28% |
| Others | 0.03% |
| Below B | 0.01% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
BSV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 71.65%, 13.08%, 11.95%, 3.28%, and 0.03%. The fund is less weighted towards Below B (0.01%), B (0.0%), and BB (0.0%) rated bonds.
Risk Analysis
| IWM | BSV | |
| Mean Return | 1.12 | 0.16 |
| R-squared | 77.73 | 78.38 |
| Std. Deviation | 18.87 | 1.33 |
| Alpha | -5.12 | 0.21 |
| Beta | 1.23 | 0.38 |
| Sharpe Ratio | 0.68 | 0.98 |
| Treynor Ratio | 9.56 | 3.33 |
The iShares Russell 2000 ETF (IWM) has a Standard Deviation of 18.87 with a R-squared of 77.73 and a Beta of 1.23. Its Alpha is -5.12 while IWM’s Sharpe Ratio is 0.68. Furthermore, the fund has a Mean Return of 1.12 and a Treynor Ratio of 9.56.
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Beta of 0.38 with a R-squared of 78.38 and a Standard Deviation of 1.33. Its Treynor Ratio is 3.33 while BSV’s Alpha is 0.21. Furthermore, the fund has a Sharpe Ratio of 0.98 and a Mean Return of 0.16.
IWM’s Mean Return is 0.96 points higher than that of BSV and its R-squared is 0.65 points lower. With a Standard Deviation of 18.87, IWM is slightly more volatile than BSV. The Alpha and Beta of IWM are 5.33 points lower and 0.85 points higher than BSV’s Alpha and Beta.
Performance
Annual Returns
| Year | IWM | BSV |
| 2020 | 19.89% | 4.67% |
| 2019 | 25.42% | 4.92% |
| 2018 | -11.02% | 1.34% |
| 2017 | 14.66% | 1.2% |
| 2016 | 21.36% | 1.42% |
| 2015 | -4.33% | 0.92% |
| 2014 | 4.94% | 1.32% |
| 2013 | 38.85% | 0.17% |
| 2012 | 16.39% | 1.98% |
| 2011 | -4.19% | 3.04% |
| 2010 | 26.76% | 4.0% |
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 2019 was the strongest year for BSV, returning 4.92% on an annual basis. The poorest year for BSV in the last ten years was 2013, with a yield of 0.17%. Most years the Vanguard Short-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2018, 2016, and 2012, when gains were 1.34%, 1.42%, and 1.98% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWM | $10,000 | $36,686 | 13.52% |
| BSV | $10,000 | $12,785 | 2.27% |
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 BSV, the end total would have been $12,785. This equates to a $2,785 profit over 11 years and a compound annual growth rate (CAGR) of 2.27%.
IWM’s CAGR is 11.25 percentage points higher than that of BSV and as a result, would have yielded $23,901 more on a $10,000 investment. Thus, IWM outperformed BSV by 11.25% annually.
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