Skip to content

IWS vs. IEF: What’s The Difference?

The iShares Russell Mid-Cap Value ETF (IWS) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. IWS is a iShares Mid-Cap Value fund and IEF is a iShares Long Government fund. So, what’s the difference between IWS and IEF? And which fund is better?

The expense ratio of IWS is 0.08 percentage points higher than IEF’s (0.23% vs. 0.15%). IWS also has a high exposure to the financial services sector while IEF is mostly comprised of AAA bonds. Overall, IWS has provided higher returns than IEF over the past 11 years.

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

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

IWSIEF
NameiShares Russell Mid-Cap Value ETFiShares 7-10 Year Treasury Bond ETF
CategoryMid-Cap ValueLong Government
IssueriSharesiShares
AUM14.24B13.44B
Avg. Return12.35%5.06%
Div. Yield1.34%0.84%
Expense Ratio0.23%0.15%

The iShares Russell Mid-Cap Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

The iShares 7-10 Year Treasury Bond ETF (IEF) is a Long Government fund that is issued by iShares. It currently has 13.44B total assets under management and has yielded an average annual return of 5.06% over the past 10 years. The fund has a dividend yield of 0.84% with an expense ratio of 0.15%.

IWS’s dividend yield is 0.50% higher than that of IEF (1.34% vs. 0.84%). Also, IWS yielded on average 7.29% more per year over the past decade (12.35% vs. 5.06%). The expense ratio of IWS is 0.08 percentage points higher than IEF’s (0.23% vs. 0.15%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Holdings

IWS - Holdings

IWS HoldingsWeight
Twitter Inc0.69%
Marvell Technology Inc0.69%
IHS Markit Ltd0.62%
Prudential Financial Inc0.56%
Otis Worldwide Corp Ordinary Shares0.54%
International Flavors & Fragrances Inc0.53%
Xcel Energy Inc0.52%
Motorola Solutions Inc0.52%
Aptiv PLC0.52%
Aflac Inc0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

IEF - Holdings

IEF Bond SectorsWeight
AAA100.0%
Others0.0%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

IEF’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.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

IWSIEF
Mean Return1.060.32
R-squared87.0477.56
Std. Deviation16.035.42
Alpha-4.11-1.2
Beta1.11.59
Sharpe Ratio0.750.6
Treynor Ratio10.31.97

The iShares Russell Mid-Cap Value ETF (IWS) has a Sharpe Ratio of 0.75 with a R-squared of 87.04 and a Treynor Ratio of 10.3. Its Beta is 1.1 while IWS’s Standard Deviation is 16.03. Furthermore, the fund has a Mean Return of 1.06 and a Alpha of -4.11.

The iShares 7-10 Year Treasury Bond ETF (IEF) has a Sharpe Ratio of 0.6 with a Mean Return of 0.32 and a Standard Deviation of 5.42. Its Treynor Ratio is 1.97 while IEF’s Alpha is -1.2. Furthermore, the fund has a Beta of 1.59 and a R-squared of 77.56.

IWS’s Mean Return is 0.74 points higher than that of IEF and its R-squared is 9.48 points higher. With a Standard Deviation of 16.03, IWS is slightly more volatile than IEF. The Alpha and Beta of IWS are 2.91 points lower and 0.49 points lower than IEF’s Alpha and Beta.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

IWS vs. IEF - Annual Returns

YearIWSIEF
20204.76%9.84%
201926.78%8.38%
2018-12.36%0.82%
201713.1%2.47%
201619.69%1.0%
2015-4.93%1.55%
201414.49%8.92%
201333.11%-6.12%
201218.27%4.06%
2011-1.55%15.46%
201024.46%9.29%

IWS had its best year in 2013 with an annual return of 33.11%. IWS’s worst year over the past decade yielded -12.36% and occurred in 2018. In most years the iShares Russell Mid-Cap Value ETF provided moderate returns such as in 2017, 2014, and 2012 where annual returns amounted to 13.1%, 14.49%, and 18.27% respectively.

The year 2011 was the strongest year for IEF, returning 15.46% on an annual basis. The poorest year for IEF in the last ten years was 2013, with a yield of -6.12%. Most years the iShares 7-10 Year Treasury Bond ETF has given investors modest returns, such as in 2017, 2012, and 2019, when gains were 2.47%, 4.06%, and 8.38% respectively.

Portfolio Growth

IWS vs. IEF - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IWS$10,000$33,08312.35%
IEF$10,000$16,9365.06%

A $10,000 investment in IWS would have resulted in a final balance of $33,083. This is a profit of $23,083 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.35%.

With a $10,000 investment in IEF, the end total would have been $16,936. This equates to a $6,936 profit over 11 years and a compound annual growth rate (CAGR) of 5.06%.

IWS’s CAGR is 7.29 percentage points higher than that of IEF and as a result, would have yielded $16,147 more on a $10,000 investment. Thus, IWS outperformed IEF by 7.29% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply

Your email address will not be published. Required fields are marked *