IWN vs. IEF: What’s The Difference?

The iShares Russell 2000 Value ETF (IWN) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. IWN is a iShares Small Value fund and IEF is a iShares Long Government fund. So, what’s the difference between IWN and IEF? And which fund is better?

The expense ratio of IWN is 0.09 percentage points higher than IEF’s (0.24% vs. 0.15%). IWN also has a high exposure to the financial services sector while IEF is mostly comprised of AAA bonds. Overall, IWN has provided higher returns than IEF over the past 11 years.

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

Summary

IWN IEF
Name iShares Russell 2000 Value ETF iShares 7-10 Year Treasury Bond ETF
Category Small Value Long Government
Issuer iShares iShares
AUM 15.48B 13.44B
Avg. Return 10.96% 5.06%
Div. Yield 1.26% 0.84%
Expense Ratio 0.24% 0.15%

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 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%.

IWN’s dividend yield is 0.42% higher than that of IEF (1.26% vs. 0.84%). Also, IWN yielded on average 5.90% more per year over the past decade (10.96% vs. 5.06%). The expense ratio of IWN is 0.09 percentage points higher than IEF’s (0.24% vs. 0.15%).

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Fund Composition

Holdings

IWN - 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%.

IEF - Holdings

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.

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Risk Analysis

IWN IEF
Mean Return 1.01 0.32
R-squared 72.64 77.56
Std. Deviation 19.28 5.42
Alpha -6.32 -1.2
Beta 1.21 1.59
Sharpe Ratio 0.59 0.6
Treynor Ratio 8.3 1.97

The iShares Russell 2000 Value ETF (IWN) has a R-squared of 72.64 with a Standard Deviation of 19.28 and a Beta of 1.21. Its Treynor Ratio is 8.3 while IWN’s Alpha is -6.32. Furthermore, the fund has a Mean Return of 1.01 and a Sharpe Ratio of 0.59.

The iShares 7-10 Year Treasury Bond ETF (IEF) has a Standard Deviation of 5.42 with a Alpha of -1.2 and a Sharpe Ratio of 0.6. Its Mean Return is 0.32 while IEF’s Treynor Ratio is 1.97. Furthermore, the fund has a R-squared of 77.56 and a Beta of 1.59.

IWN’s Mean Return is 0.69 points higher than that of IEF and its R-squared is 4.92 points lower. With a Standard Deviation of 19.28, IWN is slightly more volatile than IEF. The Alpha and Beta of IWN are 5.12 points lower and 0.38 points lower than IEF’s Alpha and Beta.

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Performance

Annual Returns

IWN vs. IEF - Annual Returns

Year IWN IEF
2020 4.5% 9.84%
2019 22.17% 8.38%
2018 -12.94% 0.82%
2017 7.73% 2.47%
2016 31.64% 1.0%
2015 -7.53% 1.55%
2014 4.13% 8.92%
2013 34.3% -6.12%
2012 17.92% 4.06%
2011 -5.64% 15.46%
2010 24.29% 9.29%

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 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

IWN vs. IEF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWN $10,000 $28,189 10.96%
IEF $10,000 $16,936 5.06%

A $10,000 investment in IWN would have resulted in a final balance of $28,189. This is a profit of $18,189 over 11 years and amounts to a compound annual growth rate (CAGR) of 10.96%.

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%.

IWN’s CAGR is 5.90 percentage points higher than that of IEF and as a result, would have yielded $11,253 more on a $10,000 investment. Thus, IWN outperformed IEF by 5.90% annually.


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