IWR vs. TLT: What’s The Difference?

The iShares Russell Mid-Cap ETF (IWR) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. IWR is a iShares Mid-Cap Blend fund and TLT is a iShares Long Government fund. So, what’s the difference between IWR and TLT? And which fund is better?

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

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

Summary

IWR TLT
Name iShares Russell Mid-Cap ETF iShares 20+ Year Treasury Bond ETF
Category Mid-Cap Blend Long Government
Issuer iShares iShares
AUM 29.84B 15.15B
Avg. Return 14.15% 9.00%
Div. Yield 0.99% 1.5%
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 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.

IWR’s dividend yield is 0.51% lower than that of TLT (0.99% vs. 1.5%). Also, IWR yielded on average 5.16% more per year over the past decade (14.15% vs. 9.00%). The expense ratio of IWR is 0.04 percentage points higher than TLT’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%.

TLT - Holdings

TLT 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%

TLT’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 TLT
Mean Return 1.17 0.63
R-squared 91.52 68.76
Std. Deviation 15.66 12.76
Alpha -2.8 -2.83
Beta 1.11 3.54
Sharpe Ratio 0.86 0.55
Treynor Ratio 11.72 1.82

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

The iShares 20+ Year Treasury Bond ETF (TLT) has a Mean Return of 0.63 with a Treynor Ratio of 1.82 and a Standard Deviation of 12.76. Its R-squared is 68.76 while TLT’s Beta is 3.54. Furthermore, the fund has a Alpha of -2.83 and a Sharpe Ratio of 0.55.

IWR’s Mean Return is 0.54 points higher than that of TLT and its R-squared is 22.76 points higher. With a Standard Deviation of 15.66, IWR is slightly more volatile than TLT. The Alpha and Beta of IWR are 0.03 points higher and 2.43 points lower than TLT’s Alpha and Beta.

Performance

Annual Returns

IWR vs. TLT - Annual Returns

Year IWR TLT
2020 16.91% 17.92%
2019 30.31% 14.93%
2018 -9.13% -2.07%
2017 18.32% 8.92%
2016 13.58% 1.36%
2015 -2.57% -1.65%
2014 13.03% 27.35%
2013 34.5% -13.91%
2012 17.13% 3.25%
2011 -1.67% 33.6%
2010 25.25% 9.25%

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 2011 was the strongest year for TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% respectively.

Portfolio Growth

IWR vs. TLT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWR $10,000 $39,751 14.15%
TLT $10,000 $23,809 9.00%

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 TLT, the end total would have been $23,809. This equates to a $13,809 profit over 11 years and a compound annual growth rate (CAGR) of 9.00%.

IWR’s CAGR is 5.16 percentage points higher than that of TLT and as a result, would have yielded $15,942 more on a $10,000 investment. Thus, IWR outperformed TLT by 5.16% annually.


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