The iShares Russell 2000 Value ETF (IWN) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. IWN is a iShares Small Value fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between IWN and GOVT? And which fund is better?
The expense ratio of IWN is 0.19 percentage points higher than GOVT’s (0.24% vs. 0.05%). IWN also has a high exposure to the financial services sector while GOVT is mostly comprised of AAA bonds. Overall, IWN has provided higher returns than GOVT over the past 8 years.
In this article, we’ll compare IWN vs. GOVT. We’ll look at portfolio growth and annual returns, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss IWN’s and GOVT’s performance, holdings, and fund composition and examine how these affect their overall returns.
Summary
| IWN | GOVT | |
| Name | iShares Russell 2000 Value ETF | iShares U.S. Treasury Bond ETF |
| Category | Small Value | Intermediate Government |
| Issuer | iShares | iShares |
| AUM | 15.48B | 17.07B |
| Avg. Return | 10.96% | 2.67% |
| Div. Yield | 1.26% | 1.0% |
| Expense Ratio | 0.24% | 0.05% |
The iShares Russell 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.
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%.
IWN’s dividend yield is 0.26% higher than that of GOVT (1.26% vs. 1.0%). Also, IWN yielded on average 8.29% more per year over the past decade (10.96% vs. 2.67%). The expense ratio of IWN is 0.19 percentage points higher than GOVT’s (0.24% vs. 0.05%).
Fund Composition
Holdings
| IWN Holdings | Weight |
| AMC Entertainment Holdings Inc Class A | 1.06% |
| Tenet Healthcare Corp | 0.47% |
| Stag Industrial Inc | 0.47% |
| Ovintiv Inc | 0.45% |
| EMCOR Group Inc | 0.42% |
| Valley National Bancorp | 0.37% |
| Chesapeake Energy Corp Ordinary Shares – New | 0.37% |
| Agree Realty Corp | 0.36% |
| Macy’s Inc | 0.35% |
| Essent Group Ltd | 0.35% |
IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.
Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.
| GOVT 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% |
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.
Risk Analysis
| IWN | GOVT | |
| Mean Return | 1.01 | 0 |
| R-squared | 72.64 | 0 |
| Std. Deviation | 19.28 | 0 |
| Alpha | -6.32 | 0 |
| Beta | 1.21 | 0 |
| Sharpe Ratio | 0.59 | 0 |
| Treynor Ratio | 8.3 | 0 |
The iShares Russell 2000 Value ETF (IWN) has a Treynor Ratio of 8.3 with a Beta of 1.21 and a Standard Deviation of 19.28. Its Mean Return is 1.01 while IWN’s R-squared is 72.64. Furthermore, the fund has a Sharpe Ratio of 0.59 and a Alpha of -6.32.
The iShares U.S. Treasury Bond ETF (GOVT) has a Standard Deviation of 0 with a Sharpe Ratio of 0 and a Alpha of 0. Its R-squared is 0 while GOVT’s Beta is 0. Furthermore, the fund has a Mean Return of 0 and a Treynor Ratio of 0.
IWN’s Mean Return is 1.01 points higher than that of GOVT and its R-squared is 72.64 points higher. With a Standard Deviation of 19.28, IWN is slightly more volatile than GOVT. The Alpha and Beta of IWN are 6.32 points lower and 1.21 points higher than GOVT’s Alpha and Beta.
Performance
Annual Returns
| Year | IWN | GOVT |
| 2020 | 4.5% | 7.92% |
| 2019 | 22.17% | 6.71% |
| 2018 | -12.94% | 0.74% |
| 2017 | 7.73% | 2.19% |
| 2016 | 31.64% | 0.92% |
| 2015 | -7.53% | 0.76% |
| 2014 | 4.13% | 4.99% |
| 2013 | 34.3% | -2.84% |
| 2012 | 17.92% | 0.0% |
| 2011 | -5.64% | 0.0% |
| 2010 | 24.29% | 0.0% |
IWN had its best year in 2013 with an annual return of 34.3%. IWN’s worst year over the past decade yielded -12.94% and occurred in 2018. In most years the iShares Russell 2000 Value ETF provided moderate returns such as in 2020, 2017, and 2012 where annual returns amounted to 4.5%, 7.73%, and 17.92% 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.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWN | $10,000 | $20,383 | 10.96% |
| GOVT | $10,000 | $12,297 | 2.67% |
A $10,000 investment in IWN would have resulted in a final balance of $20,383. This is a profit of $10,383 over 8 years and amounts to a compound annual growth rate (CAGR) of 10.96%.
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%.
IWN’s CAGR is 8.29 percentage points higher than that of GOVT and as a result, would have yielded $8,086 more on a $10,000 investment. Thus, IWN outperformed GOVT by 8.29% annually.
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