The iShares Russell 2000 ETF (IWM) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and IEF is a iShares Long Government fund. So, what’s the difference between IWM and IEF? And which fund is better?
The expense ratio of IWM is 0.04 percentage points higher than IEF’s (0.19% vs. 0.15%). IWM also has a high exposure to the healthcare sector while IEF is mostly comprised of AAA bonds. Overall, IWM has provided higher returns than IEF over the past ten years.
In this article, we’ll compare IWM vs. IEF. We’ll look at portfolio growth and industry exposure, as well as at their annual returns and fund composition. Moreover, I’ll also discuss IWM’s and IEF’s performance, risk metrics, and holdings and examine how these affect their overall returns.
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Summary
| IWM | IEF | |
| Name | iShares Russell 2000 ETF | iShares 7-10 Year Treasury Bond ETF |
| Category | Small Blend | Long Government |
| Issuer | iShares | iShares |
| AUM | 66.48B | 13.44B |
| Avg. Return | 13.52% | 5.06% |
| Div. Yield | 0.86% | 0.84% |
| Expense Ratio | 0.19% | 0.15% |
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 7-10 Year Treasury Bond ETF (IEF) is a Long Government fund that is issued by iShares. It currently has 13.44B total assets under management and has yielded an average annual return of 5.06% over the past 10 years. The fund has a dividend yield of 0.84% with an expense ratio of 0.15%.
IWM’s dividend yield is 0.02% higher than that of IEF (0.86% vs. 0.84%). Also, IWM yielded on average 8.46% more per year over the past decade (13.52% vs. 5.06%). The expense ratio of IWM is 0.04 percentage points higher than IEF’s (0.19% vs. 0.15%).
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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%.
| IEF 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% |
IEF’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
| IWM | IEF | |
| Mean Return | 1.12 | 0.32 |
| R-squared | 77.73 | 77.56 |
| Std. Deviation | 18.87 | 5.42 |
| Alpha | -5.12 | -1.2 |
| Beta | 1.23 | 1.59 |
| Sharpe Ratio | 0.68 | 0.6 |
| Treynor Ratio | 9.56 | 1.97 |
The iShares Russell 2000 ETF (IWM) has a Sharpe Ratio of 0.68 with a Standard Deviation of 18.87 and a Treynor Ratio of 9.56. Its Beta is 1.23 while IWM’s Mean Return is 1.12. Furthermore, the fund has a R-squared of 77.73 and a Alpha of -5.12.
The iShares 7-10 Year Treasury Bond ETF (IEF) has a Standard Deviation of 5.42 with a Mean Return of 0.32 and a Treynor Ratio of 1.97. Its R-squared is 77.56 while IEF’s Alpha is -1.2. Furthermore, the fund has a Beta of 1.59 and a Sharpe Ratio of 0.6.
IWM’s Mean Return is 0.80 points higher than that of IEF and its R-squared is 0.17 points higher. With a Standard Deviation of 18.87, IWM is slightly more volatile than IEF. The Alpha and Beta of IWM are 3.92 points lower and 0.36 points lower than IEF’s Alpha and Beta.
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Performance
Annual Returns
| Year | IWM | IEF |
| 2020 | 19.89% | 9.84% |
| 2019 | 25.42% | 8.38% |
| 2018 | -11.02% | 0.82% |
| 2017 | 14.66% | 2.47% |
| 2016 | 21.36% | 1.0% |
| 2015 | -4.33% | 1.55% |
| 2014 | 4.94% | 8.92% |
| 2013 | 38.85% | -6.12% |
| 2012 | 16.39% | 4.06% |
| 2011 | -4.19% | 15.46% |
| 2010 | 26.76% | 9.29% |
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 IEF, returning 15.46% on an annual basis. The poorest year for IEF in the last ten years was 2013, with a yield of -6.12%. Most years the iShares 7-10 Year Treasury Bond ETF has given investors modest returns, such as in 2017, 2012, and 2019, when gains were 2.47%, 4.06%, and 8.38% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWM | $10,000 | $36,686 | 13.52% |
| IEF | $10,000 | $16,936 | 5.06% |
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 IEF, the end total would have been $16,936. This equates to a $6,936 profit over 11 years and a compound annual growth rate (CAGR) of 5.06%.
IWM’s CAGR is 8.46 percentage points higher than that of IEF and as a result, would have yielded $19,750 more on a $10,000 investment. Thus, IWM outperformed IEF by 8.46% annually.
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