IWR vs. SHY: What’s The Difference?

The iShares Russell Mid-Cap ETF (IWR) and the iShares 1-3 Year Treasury Bond ETF (SHY) are both among the Top 100 ETFs. IWR is a iShares Mid-Cap Blend fund and SHY is a iShares Short Government fund. So, what’s the difference between IWR and SHY? And which fund is better?

The expense ratio of IWR is 0.04 percentage points higher than SHY’s (0.19% vs. 0.15%). IWR also has a high exposure to the technology sector while SHY is mostly comprised of AAA bonds. Overall, IWR has provided higher returns than SHY over the past ten years.

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

Summary

IWR SHY
Name iShares Russell Mid-Cap ETF iShares 1-3 Year Treasury Bond ETF
Category Mid-Cap Blend Short Government
Issuer iShares iShares
AUM 29.84B 19.51B
Avg. Return 14.15% 1.27%
Div. Yield 0.99% 0.46%
Expense Ratio 0.19% 0.15%

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 1-3 Year Treasury Bond ETF (SHY) is a Short Government fund that is issued by iShares. It currently has 19.51B total assets under management and has yielded an average annual return of 1.27% over the past 10 years. The fund has a dividend yield of 0.46% with an expense ratio of 0.15%.

IWR’s dividend yield is 0.53% higher than that of SHY (0.99% vs. 0.46%). Also, IWR yielded on average 12.88% more per year over the past decade (14.15% vs. 1.27%). The expense ratio of IWR is 0.04 percentage points higher than SHY’s (0.19% vs. 0.15%).

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%.

SHY - Holdings

SHY Bond Sectors Weight
AAA 99.67%
Others 0.33%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

SHY’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.67%, 0.33%, 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 SHY
Mean Return 1.17 0.09
R-squared 91.52 39.11
Std. Deviation 15.66 0.89
Alpha -2.8 -0.03
Beta 1.11 0.18
Sharpe Ratio 0.86 0.54
Treynor Ratio 11.72 2.6

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

The iShares 1-3 Year Treasury Bond ETF (SHY) has a Treynor Ratio of 2.6 with a Mean Return of 0.09 and a Standard Deviation of 0.89. Its Beta is 0.18 while SHY’s Alpha is -0.03. Furthermore, the fund has a R-squared of 39.11 and a Sharpe Ratio of 0.54.

IWR’s Mean Return is 1.08 points higher than that of SHY and its R-squared is 52.41 points higher. With a Standard Deviation of 15.66, IWR is slightly more volatile than SHY. The Alpha and Beta of IWR are 2.77 points lower and 0.93 points higher than SHY’s Alpha and Beta.

Performance

Annual Returns

IWR vs. SHY - Annual Returns

Year IWR SHY
2020 16.91% 3.01%
2019 30.31% 3.42%
2018 -9.13% 1.45%
2017 18.32% 0.27%
2016 13.58% 0.75%
2015 -2.57% 0.43%
2014 13.03% 0.48%
2013 34.5% 0.23%
2012 17.13% 0.31%
2011 -1.67% 1.43%
2010 25.25% 2.23%

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 SHY, returning 3.42% on an annual basis. The poorest year for SHY in the last ten years was 2013, with a yield of 0.23%. Most years the iShares 1-3 Year Treasury Bond ETF has given investors modest returns, such as in 2014, 2016, and 2011, when gains were 0.48%, 0.75%, and 1.43% respectively.

Portfolio Growth

IWR vs. SHY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWR $10,000 $39,751 14.15%
SHY $10,000 $11,486 1.27%

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 SHY, the end total would have been $11,486. This equates to a $1,486 profit over 11 years and a compound annual growth rate (CAGR) of 1.27%.

IWR’s CAGR is 12.88 percentage points higher than that of SHY and as a result, would have yielded $28,265 more on a $10,000 investment. Thus, IWR outperformed SHY by 12.88% annually.


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