IWR vs. HYG: What’s The Difference?

The iShares Russell Mid-Cap ETF (IWR) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) are both among the Top 100 ETFs. IWR is a iShares Mid-Cap Blend fund and HYG is a iShares High Yield Bond fund. So, what’s the difference between IWR and HYG? And which fund is better?

The expense ratio of IWR is 0.29 percentage points lower than HYG’s (0.19% vs. 0.48%). IWR also has a high exposure to the technology sector while HYG is mostly comprised of BB bonds. Overall, IWR has provided higher returns than HYG over the past ten years.

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

Summary

IWR HYG
Name iShares Russell Mid-Cap ETF iShares iBoxx $ High Yield Corporate Bond ETF
Category Mid-Cap Blend High Yield Bond
Issuer iShares iShares
AUM 29.84B 20.03B
Avg. Return 14.15% 6.42%
Div. Yield 0.99% 4.44%
Expense Ratio 0.19% 0.48%

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 iBoxx $ High Yield Corporate Bond ETF (HYG) is a High Yield Bond fund that is issued by iShares. It currently has 20.03B total assets under management and has yielded an average annual return of 6.42% over the past 10 years. The fund has a dividend yield of 4.44% with an expense ratio of 0.48%.

IWR’s dividend yield is 3.45% lower than that of HYG (0.99% vs. 4.44%). Also, IWR yielded on average 7.74% more per year over the past decade (14.15% vs. 6.42%). The expense ratio of IWR is 0.29 percentage points lower than HYG’s (0.19% vs. 0.48%).

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%.

HYG - Holdings

HYG Bond Sectors Weight
BB 56.53%
B 31.27%
Below B 11.4%
BBB 0.61%
AAA 0.28%
A 0.0%
AA 0.0%
US Government 0.0%
Others -0.09%

HYG’s Top Bond Sectors are ratings of BB, B, Below B, BBB, and AAA at 56.53%, 31.27%, 11.4%, 0.61%, and 0.28%. The fund is less weighted towards A (0.0%), AA (0.0%), and US Government (0.0%) rated bonds.

Risk Analysis

IWR HYG
Mean Return 1.17 0.46
R-squared 91.52 4.1
Std. Deviation 15.66 6.96
Alpha -2.8 3.58
Beta 1.11 0.48
Sharpe Ratio 0.86 0.7
Treynor Ratio 11.72 10.01

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

The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) has a Standard Deviation of 6.96 with a Sharpe Ratio of 0.7 and a Beta of 0.48. Its Alpha is 3.58 while HYG’s Treynor Ratio is 10.01. Furthermore, the fund has a Mean Return of 0.46 and a R-squared of 4.1.

IWR’s Mean Return is 0.71 points higher than that of HYG and its R-squared is 87.42 points higher. With a Standard Deviation of 15.66, IWR is slightly more volatile than HYG. The Alpha and Beta of IWR are 6.38 points lower and 0.63 points higher than HYG’s Alpha and Beta.

Performance

Annual Returns

IWR vs. HYG - Annual Returns

Year IWR HYG
2020 16.91% 4.12%
2019 30.31% 14.23%
2018 -9.13% -1.93%
2017 18.32% 6.09%
2016 13.58% 13.92%
2015 -2.57% -5.55%
2014 13.03% 2.0%
2013 34.5% 5.9%
2012 17.13% 13.83%
2011 -1.67% 5.89%
2010 25.25% 12.07%

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 2019 was the strongest year for HYG, returning 14.23% on an annual basis. The poorest year for HYG in the last ten years was 2015, with a yield of -5.55%. Most years the iShares iBoxx $ High Yield Corporate Bond ETF has given investors modest returns, such as in 2011, 2013, and 2017, when gains were 5.89%, 5.9%, and 6.09% respectively.

Portfolio Growth

IWR vs. HYG - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWR $10,000 $39,751 14.15%
HYG $10,000 $19,427 6.42%

A $10,000 investment in IWR would have resulted in a final balance of $39,751. This is a profit of $29,751 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.15%.

With a $10,000 investment in HYG, the end total would have been $19,427. This equates to a $9,427 profit over 11 years and a compound annual growth rate (CAGR) of 6.42%.

IWR’s CAGR is 7.74 percentage points higher than that of HYG and as a result, would have yielded $20,324 more on a $10,000 investment. Thus, IWR outperformed HYG by 7.74% annually.


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