IXUS vs. SHY: What’s The Difference?

The iShares Core MSCI Total International Stock ETF (IXUS) and the iShares 1-3 Year Treasury Bond ETF (SHY) are both among the Top 100 ETFs. IXUS is a iShares Foreign Large Blend fund and SHY is a iShares Short Government fund. So, what’s the difference between IXUS and SHY? And which fund is better?

The expense ratio of IXUS is 0.06 percentage points lower than SHY’s (0.09% vs. 0.15%). IXUS also has a high exposure to the financial services sector while SHY is mostly comprised of AAA bonds. Overall, IXUS has provided higher returns than SHY over the past ten years.

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

Summary

IXUS SHY
Name iShares Core MSCI Total International Stock ETF iShares 1-3 Year Treasury Bond ETF
Category Foreign Large Blend Short Government
Issuer iShares iShares
AUM 29.54B 19.51B
Avg. Return 6.09% 1.27%
Div. Yield 2.13% 0.46%
Expense Ratio 0.09% 0.15%

The iShares Core MSCI Total International Stock ETF (IXUS) is a Foreign Large Blend fund that is issued by iShares. It currently has 29.54B total assets under management and has yielded an average annual return of 6.09% over the past 10 years. The fund has a dividend yield of 2.13% with an expense ratio of 0.09%.

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%.

IXUS’s dividend yield is 1.67% higher than that of SHY (2.13% vs. 0.46%). Also, IXUS yielded on average 4.81% more per year over the past decade (6.09% vs. 1.27%). The expense ratio of IXUS is 0.06 percentage points lower than SHY’s (0.09% vs. 0.15%).

Fund Composition

Holdings

IXUS - Holdings

IXUS Holdings Weight
Taiwan Semiconductor Manufacturing Co Ltd 1.64%
Tencent Holdings Ltd 1.35%
Alibaba Group Holding Ltd Ordinary Shares 1.34%
Nestle SA 1.1%
Samsung Electronics Co Ltd 1.06%
ASML Holding NV 0.9%
Roche Holding AG 0.81%
LVMH Moet Hennessy Louis Vuitton SE 0.67%
Novartis AG 0.62%
Toyota Motor Corp 0.59%

IXUS’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, and Samsung Electronics Co Ltd at 1.64%, 1.35%, 1.34%, 1.1%, and 1.06%.

ASML Holding NV (0.9%), Roche Holding AG (0.81%), and LVMH Moet Hennessy Louis Vuitton SE (0.67%) have a slightly smaller but still significant weight. Novartis AG and Toyota Motor Corp are also represented in the IXUS’s holdings at 0.62% and 0.59%.

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

IXUS SHY
Mean Return 0 0.09
R-squared 0 39.11
Std. Deviation 0 0.89
Alpha 0 -0.03
Beta 0 0.18
Sharpe Ratio 0 0.54
Treynor Ratio 0 2.6

The iShares Core MSCI Total International Stock ETF (IXUS) has a Treynor Ratio of 0 with a Sharpe Ratio of 0 and a Beta of 0. Its Mean Return is 0 while IXUS’s Standard Deviation is 0. Furthermore, the fund has a Alpha of 0 and a R-squared of 0.

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

IXUS’s Mean Return is 0.09 points lower than that of SHY and its R-squared is 39.11 points lower. With a Standard Deviation of 0, IXUS is slightly less volatile than SHY. The Alpha and Beta of IXUS are 0.03 points higher and 0.18 points lower than SHY’s Alpha and Beta.

Performance

Annual Returns

IXUS vs. SHY - Annual Returns

Year IXUS SHY
2020 11.14% 3.01%
2019 21.85% 3.42%
2018 -14.55% 1.45%
2017 28.08% 0.27%
2016 4.66% 0.75%
2015 -4.62% 0.43%
2014 -3.96% 0.48%
2013 15.85% 0.23%
2012 0.0% 0.31%
2011 0.0% 1.43%
2010 0.0% 2.23%

IXUS had its best year in 2017 with an annual return of 28.08%. IXUS’s worst year over the past decade yielded -14.55% and occurred in 2018. In most years the iShares Core MSCI Total International Stock ETF provided moderate returns such as in 2011, 2010, and 2016 where annual returns amounted to 0.0%, 0.0%, and 4.66% 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

IXUS vs. SHY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IXUS $10,000 $14,209 6.09%
SHY $10,000 $11,017 1.27%

A $10,000 investment in IXUS would have resulted in a final balance of $14,209. This is a profit of $4,209 over 7 years and amounts to a compound annual growth rate (CAGR) of 6.09%.

With a $10,000 investment in SHY, the end total would have been $11,017. This equates to a $1,017 profit over 7 years and a compound annual growth rate (CAGR) of 1.27%.

IXUS’s CAGR is 4.81 percentage points higher than that of SHY and as a result, would have yielded $3,192 more on a $10,000 investment. Thus, IXUS outperformed SHY by 4.81% annually.


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