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IWM vs. IGSB: What’s The Difference?

The iShares Russell 2000 ETF (IWM) and the iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and IGSB is a iShares Short-Term Bond fund. So, what’s the difference between IWM and IGSB? And which fund is better?

The expense ratio of IWM is 0.13 percentage points higher than IGSB’s (0.19% vs. 0.06%). IWM also has a high exposure to the healthcare sector while IGSB is mostly comprised of BBB bonds. Overall, IWM has provided higher returns than IGSB over the past ten years.

In this article, we’ll compare IWM vs. IGSB. We’ll look at fund composition and annual returns, as well as at their portfolio growth and risk metrics. Moreover, I’ll also discuss IWM’s and IGSB’s industry exposure, holdings, and performance and examine how these affect their overall returns.

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Summary

IWMIGSB
NameiShares Russell 2000 ETFiShares 1-5 Year Investment Grade Corporate Bond ETF
CategorySmall BlendShort-Term Bond
IssueriSharesiShares
AUM66.48B26.63B
Avg. Return13.52%2.51%
Div. Yield0.86%2.02%
Expense Ratio0.19%0.06%

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 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.

IWM’s dividend yield is 1.16% lower than that of IGSB (0.86% vs. 2.02%). Also, IWM yielded on average 11.01% more per year over the past decade (13.52% vs. 2.51%). The expense ratio of IWM is 0.13 percentage points higher than IGSB’s (0.19% vs. 0.06%).

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Fund Composition

Holdings

IWM - Holdings

IWM HoldingsWeight
AMC Entertainment Holdings Inc Class A0.52%
Intellia Therapeutics Inc0.33%
Crocs Inc0.3%
BlackRock Cash Funds Treasury SL Agency0.29%
Tenet Healthcare Corp0.26%
Lattice Semiconductor Corp0.26%
Tetra Tech Inc0.25%
II-VI Inc0.25%
EastGroup Properties Inc0.24%
Arrowhead Pharmaceuticals Inc0.24%

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%.

IGSB - Holdings

IGSB Bond SectorsWeight
BBB50.48%
A40.04%
AA7.46%
AAA2.21%
BB0.09%
Below B0.0%
B0.0%
US Government0.0%
Others-0.28%

IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.

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Risk Analysis

IWMIGSB
Mean Return1.120.19
R-squared77.7326.13
Std. Deviation18.872
Alpha-5.120.69
Beta1.230.34
Sharpe Ratio0.680.82
Treynor Ratio9.564.82

The iShares Russell 2000 ETF (IWM) has a Standard Deviation of 18.87 with a Treynor Ratio of 9.56 and a Alpha of -5.12. Its Beta is 1.23 while IWM’s Sharpe Ratio is 0.68. Furthermore, the fund has a Mean Return of 1.12 and a R-squared of 77.73.

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Standard Deviation of 2 with a Alpha of 0.69 and a R-squared of 26.13. Its Treynor Ratio is 4.82 while IGSB’s Mean Return is 0.19. Furthermore, the fund has a Sharpe Ratio of 0.82 and a Beta of 0.34.

IWM’s Mean Return is 0.93 points higher than that of IGSB and its R-squared is 51.60 points higher. With a Standard Deviation of 18.87, IWM is slightly more volatile than IGSB. The Alpha and Beta of IWM are 5.81 points lower and 0.89 points higher than IGSB’s Alpha and Beta.

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Performance

Annual Returns

IWM vs. IGSB - Annual Returns

YearIWMIGSB
202019.89%5.26%
201925.42%7.01%
2018-11.02%1.34%
201714.66%1.41%
201621.36%1.77%
2015-4.33%0.7%
20144.94%0.74%
201338.85%1.03%
201216.39%3.28%
2011-4.19%1.34%
201026.76%3.69%

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 IGSB, returning 7.01% on an annual basis. The poorest year for IGSB in the last ten years was 2015, with a yield of 0.7%. Most years the iShares 1-5 Year Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2011, 2017, and 2016, when gains were 1.34%, 1.41%, and 1.77% respectively.

Portfolio Growth

IWM vs. IGSB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IWM$10,000$36,68613.52%
IGSB$10,000$13,1032.51%

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 IGSB, the end total would have been $13,103. This equates to a $3,103 profit over 11 years and a compound annual growth rate (CAGR) of 2.51%.

IWM’s CAGR is 11.01 percentage points higher than that of IGSB and as a result, would have yielded $23,583 more on a $10,000 investment. Thus, IWM outperformed IGSB by 11.01% annually.


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