The iShares Russell 2000 ETF (IWM) and the iShares Gold Trust (IAU) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and IAU is a iShares N/A fund. So, what’s the difference between IWM and IAU? And which fund is better?
The expense ratio of IWM is 0.06 percentage points lower than IAU’s (0.19% vs. 0.25%). IWM also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, IWM has provided higher returns than IAU over the past ten years.
In this article, we’ll compare IWM vs. IAU. We’ll look at industry exposure and risk metrics, as well as at their performance and annual returns. Moreover, I’ll also discuss IWM’s and IAU’s fund composition, holdings, and portfolio growth and examine how these affect their overall returns.
|Name||iShares Russell 2000 ETF||iShares Gold Trust|
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 Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.
IWM’s dividend yield is 0.86% higher than that of IAU (0.86% vs. 0.0%). Also, IWM yielded on average 7.49% more per year over the past decade (13.52% vs. 6.03%). The expense ratio of IWM is 0.06 percentage points lower than IAU’s (0.19% vs. 0.25%).
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The iShares Russell 2000 ETF (IWM) has the most exposure to the Healthcare sector at 20.3%. This is followed by Industrials and Technology at 14.78% and 14.21% respectively. Consumer Defensive (3.65%), Basic Materials (3.74%), and Energy (3.74%) only make up 11.13% of the fund’s total assets.
IWM’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.79%, 8.59%, 10.99%, 13.76%, and 14.21%.
The iShares Gold Trust (IAU) has the most exposure to the Technology sector at 0.0%. This is followed by Industrials and Energy at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.
IAU’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Energy stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
IWM is 20.30% more exposed to the Healthcare sector than IAU (20.3% vs 0.0%). IWM’s exposure to Industrials and Technology stocks is 14.78% higher and 14.21% higher respectively (14.78% vs. 0.0% and 14.21% vs. 0.0%). In total, Consumer Defensive, Basic Materials, and Energy also make up 11.13% more of the fund’s holdings compared to IAU (11.13% vs. 0.00%).
|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%.
IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.
N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.
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The iShares Russell 2000 ETF (IWM) has a Sharpe Ratio of 0.68 with a Treynor Ratio of 9.56 and a Alpha of -5.12. Its Standard Deviation is 18.87 while IWM’s R-squared is 77.73. Furthermore, the fund has a Beta of 1.23 and a Mean Return of 1.12.
The iShares Gold Trust (IAU) has a Standard Deviation of 16.97 with a Treynor Ratio of 1.5 and a Alpha of 4.16. Its Mean Return is 0.23 while IAU’s R-squared is 16.03. Furthermore, the fund has a Beta of 0.48 and a Sharpe Ratio of 0.13.
IWM’s Mean Return is 0.89 points higher than that of IAU and its R-squared is 61.70 points higher. With a Standard Deviation of 18.87, IWM is slightly more volatile than IAU. The Alpha and Beta of IWM are 9.28 points lower and 0.75 points higher than IAU’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 2010 was the strongest year for IAU, returning 27.93% on an annual basis. The poorest year for IAU in the last ten years was 2013, with a yield of -27.96%. Most years the iShares Gold Trust has given investors modest returns, such as in 2012, 2011, and 2016, when gains were 8.37%, 8.66%, and 8.85% 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 IAU, the end total would have been $16,786. This equates to a $6,786 profit over 11 years and a compound annual growth rate (CAGR) of 6.03%.
IWM’s CAGR is 7.49 percentage points higher than that of IAU and as a result, would have yielded $19,900 more on a $10,000 investment. Thus, IWM outperformed IAU by 7.49% annually.
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