IWR vs. GOVT: What’s The Difference?

The iShares Russell Mid-Cap ETF (IWR) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. IWR is a iShares Mid-Cap Blend fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between IWR and GOVT? And which fund is better?

The expense ratio of IWR is 0.14 percentage points higher than GOVT’s (0.19% vs. 0.05%). IWR also has a high exposure to the technology sector while GOVT is mostly comprised of AAA bonds. Overall, IWR has provided higher returns than GOVT over the past ten years.

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

Summary

IWR GOVT
Name iShares Russell Mid-Cap ETF iShares U.S. Treasury Bond ETF
Category Mid-Cap Blend Intermediate Government
Issuer iShares iShares
AUM 29.84B 17.07B
Avg. Return 14.15% 2.67%
Div. Yield 0.99% 1.0%
Expense Ratio 0.19% 0.05%

The iShares Russell Mid-Cap ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% with an expense ratio of 0.19%.

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%.

IWR’s dividend yield is 0.01% lower than that of GOVT (0.99% vs. 1.0%). Also, IWR yielded on average 11.48% more per year over the past decade (14.15% vs. 2.67%). The expense ratio of IWR is 0.14 percentage points higher than GOVT’s (0.19% vs. 0.05%).

Fund Composition

Holdings

IWR - Holdings

IWR Holdings Weight
IDEXX Laboratories Inc 0.51%
DocuSign Inc 0.51%
Twitter Inc 0.48%
Chipotle Mexican Grill Inc 0.47%
Roku Inc Class A 0.44%
Marvell Technology Inc 0.44%
DexCom Inc 0.44%
Trane Technologies PLC 0.43%
MSCI Inc 0.43%
Carrier Global Corp Ordinary Shares 0.43%

IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.

Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.

GOVT - Holdings

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

IWR GOVT
Mean Return 1.17 0
R-squared 91.52 0
Std. Deviation 15.66 0
Alpha -2.8 0
Beta 1.11 0
Sharpe Ratio 0.86 0
Treynor Ratio 11.72 0

The iShares Russell Mid-Cap ETF (IWR) has a Standard Deviation of 15.66 with a Beta of 1.11 and a Treynor Ratio of 11.72. Its Alpha is -2.8 while IWR’s Mean Return is 1.17. Furthermore, the fund has a Sharpe Ratio of 0.86 and a R-squared of 91.52.

The iShares U.S. Treasury Bond ETF (GOVT) has a Alpha of 0 with a Sharpe Ratio of 0 and a R-squared of 0. Its Mean Return is 0 while GOVT’s Standard Deviation is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Beta of 0.

IWR’s Mean Return is 1.17 points higher than that of GOVT and its R-squared is 91.52 points higher. With a Standard Deviation of 15.66, IWR is slightly more volatile than GOVT. The Alpha and Beta of IWR are 2.80 points lower and 1.11 points higher than GOVT’s Alpha and Beta.

Performance

Annual Returns

IWR vs. GOVT - Annual Returns

Year IWR GOVT
2020 16.91% 7.92%
2019 30.31% 6.71%
2018 -9.13% 0.74%
2017 18.32% 2.19%
2016 13.58% 0.92%
2015 -2.57% 0.76%
2014 13.03% 4.99%
2013 34.5% -2.84%
2012 17.13% 0.0%
2011 -1.67% 0.0%
2010 25.25% 0.0%

IWR had its best year in 2013 with an annual return of 34.5%. IWR’s worst year over the past decade yielded -9.13% and occurred in 2018. In most years the iShares Russell Mid-Cap ETF provided moderate returns such as in 2016, 2020, and 2012 where annual returns amounted to 13.58%, 16.91%, and 17.13% 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

IWR vs. GOVT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWR $10,000 $27,556 14.15%
GOVT $10,000 $12,297 2.67%

A $10,000 investment in IWR would have resulted in a final balance of $27,556. This is a profit of $17,556 over 8 years and amounts to a compound annual growth rate (CAGR) of 14.15%.

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%.

IWR’s CAGR is 11.48 percentage points higher than that of GOVT and as a result, would have yielded $15,259 more on a $10,000 investment. Thus, IWR outperformed GOVT by 11.48% annually.


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