IWR vs. IGSB: What’s The Difference?

The iShares Russell Mid-Cap ETF (IWR) and the iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) are both among the Top 100 ETFs. IWR is a iShares Mid-Cap Blend fund and IGSB is a iShares Short-Term Bond fund. So, what’s the difference between IWR and IGSB? And which fund is better?

The expense ratio of IWR is 0.13 percentage points higher than IGSB’s (0.19% vs. 0.06%). IWR also has a high exposure to the technology sector while IGSB is mostly comprised of BBB bonds. Overall, IWR has provided higher returns than IGSB over the past ten years.

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

Summary

IWR IGSB
Name iShares Russell Mid-Cap ETF iShares 1-5 Year Investment Grade Corporate Bond ETF
Category Mid-Cap Blend Short-Term Bond
Issuer iShares iShares
AUM 29.84B 26.63B
Avg. Return 14.15% 2.51%
Div. Yield 0.99% 2.02%
Expense Ratio 0.19% 0.06%

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 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.

IWR’s dividend yield is 1.03% lower than that of IGSB (0.99% vs. 2.02%). Also, IWR yielded on average 11.64% more per year over the past decade (14.15% vs. 2.51%). The expense ratio of IWR is 0.13 percentage points higher than IGSB’s (0.19% vs. 0.06%).

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%.

IGSB - Holdings

IGSB Bond Sectors Weight
BBB 50.48%
A 40.04%
AA 7.46%
AAA 2.21%
BB 0.09%
Below B 0.0%
B 0.0%
US Government 0.0%
Others -0.28%

IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.

Risk Analysis

IWR IGSB
Mean Return 1.17 0.19
R-squared 91.52 26.13
Std. Deviation 15.66 2
Alpha -2.8 0.69
Beta 1.11 0.34
Sharpe Ratio 0.86 0.82
Treynor Ratio 11.72 4.82

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

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Alpha of 0.69 with a Treynor Ratio of 4.82 and a R-squared of 26.13. Its Mean Return is 0.19 while IGSB’s Beta is 0.34. Furthermore, the fund has a Sharpe Ratio of 0.82 and a Standard Deviation of 2.

IWR’s Mean Return is 0.98 points higher than that of IGSB and its R-squared is 65.39 points higher. With a Standard Deviation of 15.66, IWR is slightly more volatile than IGSB. The Alpha and Beta of IWR are 3.49 points lower and 0.77 points higher than IGSB’s Alpha and Beta.

Performance

Annual Returns

IWR vs. IGSB - Annual Returns

Year IWR IGSB
2020 16.91% 5.26%
2019 30.31% 7.01%
2018 -9.13% 1.34%
2017 18.32% 1.41%
2016 13.58% 1.77%
2015 -2.57% 0.7%
2014 13.03% 0.74%
2013 34.5% 1.03%
2012 17.13% 3.28%
2011 -1.67% 1.34%
2010 25.25% 3.69%

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 IGSB, returning 7.01% on an annual basis. The poorest year for IGSB in the last ten years was 2015, with a yield of 0.7%. Most years the iShares 1-5 Year Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2011, 2017, and 2016, when gains were 1.34%, 1.41%, and 1.77% respectively.

Portfolio Growth

IWR vs. IGSB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWR $10,000 $39,751 14.15%
IGSB $10,000 $13,103 2.51%

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 IGSB, the end total would have been $13,103. This equates to a $3,103 profit over 11 years and a compound annual growth rate (CAGR) of 2.51%.

IWR’s CAGR is 11.64 percentage points higher than that of IGSB and as a result, would have yielded $26,648 more on a $10,000 investment. Thus, IWR outperformed IGSB by 11.64% annually.


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