The iShares Russell Mid-Cap ETF (IWR) and the iShares Preferred and Income Securities ETF (PFF) are both among the Top 100 ETFs. IWR is a iShares Mid-Cap Blend fund and PFF is a iShares Preferred Stock fund. So, what’s the difference between IWR and PFF? And which fund is better?
The expense ratio of IWR is 0.27 percentage points lower than PFF’s (0.19% vs. 0.46%). IWR also has a higher exposure to the technology sector and a higher standard deviation. Overall, IWR has provided higher returns than PFF over the past ten years.
In this article, we’ll compare IWR vs. PFF. We’ll look at fund composition and performance, as well as at their portfolio growth and holdings. Moreover, I’ll also discuss IWR’s and PFF’s risk metrics, annual returns, and industry exposure and examine how these affect their overall returns.
Summary
| IWR | PFF | |
| Name | iShares Russell Mid-Cap ETF | iShares Preferred and Income Securities ETF |
| Category | Mid-Cap Blend | Preferred Stock |
| Issuer | iShares | iShares |
| AUM | 29.84B | 19.8B |
| Avg. Return | 14.15% | 6.90% |
| Div. Yield | 0.99% | 4.47% |
| Expense Ratio | 0.19% | 0.46% |
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 Preferred and Income Securities ETF (PFF) is a Preferred Stock fund that is issued by iShares. It currently has 19.8B total assets under management and has yielded an average annual return of 6.90% over the past 10 years. The fund has a dividend yield of 4.47% with an expense ratio of 0.46%.
IWR’s dividend yield is 3.48% lower than that of PFF (0.99% vs. 4.47%). Also, IWR yielded on average 7.25% more per year over the past decade (14.15% vs. 6.90%). The expense ratio of IWR is 0.27 percentage points lower than PFF’s (0.19% vs. 0.46%).
Fund Composition
Industry Exposure
| IWR | PFF | |
| Technology | 19.67% | 0.0% |
| Industrials | 14.54% | 10.27% |
| Energy | 3.48% | 0.0% |
| Communication Services | 4.64% | 0.0% |
| Utilities | 4.46% | 81.81% |
| Healthcare | 11.76% | 3.54% |
| Consumer Defensive | 3.82% | 0.0% |
| Real Estate | 8.31% | 0.65% |
| Financial Services | 11.64% | 0.0% |
| Consumer Cyclical | 13.59% | 0.0% |
| Basic Materials | 4.1% | 3.74% |
The iShares Russell Mid-Cap ETF (IWR) has the most exposure to the Technology sector at 19.67%. This is followed by Industrials and Consumer Cyclical at 14.54% and 13.59% respectively. Consumer Defensive (3.82%), Basic Materials (4.1%), and Utilities (4.46%) only make up 12.38% of the fund’s total assets.
IWR’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Healthcare, and Consumer Cyclical stocks at 4.64%, 8.31%, 11.64%, 11.76%, and 13.59%.
The iShares Preferred and Income Securities ETF (PFF) has the most exposure to the Utilities sector at 81.81%. This is followed by Industrials and Basic Materials at 10.27% and 3.74% respectively. Financial Services (0.0%), Consumer Defensive (0.0%), and Communication Services (0.0%) only make up 0.00% of the fund’s total assets.
PFF’s mid-section with moderate exposure is comprised of Energy, Technology, Real Estate, Healthcare, and Basic Materials stocks at 0.0%, 0.0%, 0.65%, 3.54%, and 3.74%.
IWR is 19.67% more exposed to the Technology sector than PFF (19.67% vs 0.0%). IWR’s exposure to Industrials and Consumer Cyclical stocks is 4.27% higher and 13.59% higher respectively (14.54% vs. 10.27% and 13.59% vs. 0.0%). In total, Consumer Defensive, Basic Materials, and Utilities also make up 73.17% less of the fund’s holdings compared to PFF (12.38% vs. 85.55%).
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%.
| PFF Holdings | Weight |
| Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A | 2.54% |
| BlackRock Cash Funds Treasury SL Agency | 2.3% |
| Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L- | 1.79% |
| Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L- | 1.49% |
| ArcelorMittal S.A. 5.5% | 1.36% |
| Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A | 1.35% |
| Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B | 1.14% |
| NextEra Energy Inc Unit | 1.12% |
| Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 | 1.08% |
| Avantor Inc Ser A | 0.99% |
PFF’s Top Holdings are Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A, BlackRock Cash Funds Treasury SL Agency, Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-, Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-, and ArcelorMittal S.A. 5.5% at 2.54%, 2.3%, 1.79%, 1.49%, and 1.36%.
Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A (1.35%), Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B (1.14%), and NextEra Energy Inc Unit (1.12%) have a slightly smaller but still significant weight. Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 and Avantor Inc Ser A are also represented in the PFF’s holdings at 1.08% and 0.99%.
Risk Analysis
| IWR | PFF | |
| Mean Return | 1.17 | 0.52 |
| R-squared | 91.52 | 9.39 |
| Std. Deviation | 15.66 | 7.87 |
| Alpha | -2.8 | 3.45 |
| Beta | 1.11 | 0.81 |
| Sharpe Ratio | 0.86 | 0.72 |
| Treynor Ratio | 11.72 | 6.79 |
The iShares Russell Mid-Cap ETF (IWR) has a Sharpe Ratio of 0.86 with a Standard Deviation of 15.66 and a Beta of 1.11. Its R-squared is 91.52 while IWR’s Alpha is -2.8. Furthermore, the fund has a Treynor Ratio of 11.72 and a Mean Return of 1.17.
The iShares Preferred and Income Securities ETF (PFF) has a Mean Return of 0.52 with a Sharpe Ratio of 0.72 and a R-squared of 9.39. Its Alpha is 3.45 while PFF’s Treynor Ratio is 6.79. Furthermore, the fund has a Beta of 0.81 and a Standard Deviation of 7.87.
IWR’s Mean Return is 0.65 points higher than that of PFF and its R-squared is 82.13 points higher. With a Standard Deviation of 15.66, IWR is slightly more volatile than PFF. The Alpha and Beta of IWR are 6.25 points lower and 0.30 points higher than PFF’s Alpha and Beta.
Performance
Annual Returns
| Year | IWR | PFF |
| 2020 | 16.91% | 7.94% |
| 2019 | 30.31% | 15.62% |
| 2018 | -9.13% | -4.77% |
| 2017 | 18.32% | 8.33% |
| 2016 | 13.58% | 1.26% |
| 2015 | -2.57% | 4.62% |
| 2014 | 13.03% | 13.45% |
| 2013 | 34.5% | -0.59% |
| 2012 | 17.13% | 18.25% |
| 2011 | -1.67% | -2.2% |
| 2010 | 25.25% | 13.96% |
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 2012 was the strongest year for PFF, returning 18.25% on an annual basis. The poorest year for PFF in the last ten years was 2018, with a yield of -4.77%. Most years the iShares Preferred and Income Securities ETF has given investors modest returns, such as in 2015, 2020, and 2017, when gains were 4.62%, 7.94%, and 8.33% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IWR | $10,000 | $39,751 | 14.15% |
| PFF | $10,000 | $20,272 | 6.90% |
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 PFF, the end total would have been $20,272. This equates to a $10,272 profit over 11 years and a compound annual growth rate (CAGR) of 6.90%.
IWR’s CAGR is 7.25 percentage points higher than that of PFF and as a result, would have yielded $19,479 more on a $10,000 investment. Thus, IWR outperformed PFF by 7.25% annually.
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