The iShares Russell 2000 ETF (IWM) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between IWM and GOVT? And which fund is better?
The expense ratio of IWM is 0.14 percentage points higher than GOVT’s (0.19% vs. 0.05%). IWM also has a high exposure to the healthcare sector while GOVT is mostly comprised of AAA bonds. Overall, IWM has provided higher returns than GOVT over the past ten years.
In this article, we’ll compare IWM vs. GOVT. We’ll look at risk metrics and annual returns, as well as at their performance and portfolio growth. Moreover, I’ll also discuss IWM’s and GOVT’s fund composition, industry exposure, and holdings and examine how these affect their overall returns.
|Name||iShares Russell 2000 ETF||iShares U.S. Treasury Bond ETF|
|Category||Small Blend||Intermediate Government|
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 iShares U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.
IWM’s dividend yield is 0.14% lower than that of GOVT (0.86% vs. 1.0%). Also, IWM yielded on average 10.85% more per year over the past decade (13.52% vs. 2.67%). The expense ratio of IWM is 0.14 percentage points higher than GOVT’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%.
|GOVT Bond Sectors||Weight|
GOVT’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.
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The iShares Russell 2000 ETF (IWM) has a R-squared of 77.73 with a Mean Return of 1.12 and a Alpha of -5.12. Its Beta is 1.23 while IWM’s Standard Deviation is 18.87. Furthermore, the fund has a Sharpe Ratio of 0.68 and a Treynor Ratio of 9.56.
The iShares U.S. Treasury Bond ETF (GOVT) has a Sharpe Ratio of 0 with a Alpha of 0 and a Mean Return of 0. Its R-squared is 0 while GOVT’s Beta is 0. Furthermore, the fund has a Standard Deviation of 0 and a Treynor Ratio of 0.
IWM’s Mean Return is 1.12 points higher than that of GOVT and its R-squared is 77.73 points higher. With a Standard Deviation of 18.87, IWM is slightly more volatile than GOVT. The Alpha and Beta of IWM are 5.12 points lower and 1.23 points higher than GOVT’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 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IWM would have resulted in a final balance of $25,953. This is a profit of $15,953 over 8 years and amounts to a compound annual growth rate (CAGR) of 13.52%.
With a $10,000 investment in GOVT, the end total would have been $12,297. This equates to a $2,297 profit over 8 years and a compound annual growth rate (CAGR) of 2.67%.
IWM’s CAGR is 10.85 percentage points higher than that of GOVT and as a result, would have yielded $13,656 more on a $10,000 investment. Thus, IWM outperformed GOVT by 10.85% annually.
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