The iShares Russell 2000 Value ETF (IWN) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. IWN is a iShares Small Value fund and TLT is a iShares Long Government fund. So, what’s the difference between IWN and TLT? And which fund is better?

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

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

Summary

IWNTLT
NameiShares Russell 2000 Value ETFiShares 20+ Year Treasury Bond ETF
CategorySmall ValueLong Government
IssueriSharesiShares
AUM15.48B15.15B
Avg. Return10.96%9.00%
Div. Yield1.26%1.5%
Expense Ratio0.24%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 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.

IWN’s dividend yield is 0.24% lower than that of TLT (1.26% vs. 1.5%). Also, IWN yielded on average 1.97% more per year over the past decade (10.96% vs. 9.00%). The expense ratio of IWN is 0.09 percentage points higher than TLT’s (0.24% vs. 0.15%).

Fund Composition

Holdings

IWN - Holdings

IWN HoldingsWeight
AMC Entertainment Holdings Inc Class A1.06%
Tenet Healthcare Corp0.47%
Stag Industrial Inc0.47%
Ovintiv Inc0.45%
EMCOR Group Inc0.42%
Valley National Bancorp0.37%
Chesapeake Energy Corp Ordinary Shares – New0.37%
Agree Realty Corp0.36%
Macy’s Inc0.35%
Essent Group Ltd0.35%

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%.

TLT - Holdings

TLT Bond SectorsWeight
AAA100.0%
Others0.0%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

TLT’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

IWNTLT
Mean Return1.010.63
R-squared72.6468.76
Std. Deviation19.2812.76
Alpha-6.32-2.83
Beta1.213.54
Sharpe Ratio0.590.55
Treynor Ratio8.31.82

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

The iShares 20+ Year Treasury Bond ETF (TLT) has a Alpha of -2.83 with a Mean Return of 0.63 and a Treynor Ratio of 1.82. Its R-squared is 68.76 while TLT’s Beta is 3.54. Furthermore, the fund has a Standard Deviation of 12.76 and a Sharpe Ratio of 0.55.

IWN’s Mean Return is 0.38 points higher than that of TLT and its R-squared is 3.88 points higher. With a Standard Deviation of 19.28, IWN is slightly more volatile than TLT. The Alpha and Beta of IWN are 3.49 points lower and 2.33 points lower than TLT’s Alpha and Beta.

Performance

Annual Returns

IWN vs. TLT - Annual Returns

YearIWNTLT
20204.5%17.92%
201922.17%14.93%
2018-12.94%-2.07%
20177.73%8.92%
201631.64%1.36%
2015-7.53%-1.65%
20144.13%27.35%
201334.3%-13.91%
201217.92%3.25%
2011-5.64%33.6%
201024.29%9.25%

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 TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% respectively.

Portfolio Growth

IWN vs. TLT - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IWN$10,000$28,18910.96%
TLT$10,000$23,8099.00%

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 TLT, the end total would have been $23,809. This equates to a $13,809 profit over 11 years and a compound annual growth rate (CAGR) of 9.00%.

IWN’s CAGR is 1.97 percentage points higher than that of TLT and as a result, would have yielded $4,380 more on a $10,000 investment. Thus, IWN outperformed TLT by 1.97% annually.

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