The iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) and the iShares Core MSCI Total International Stock ETF (IXUS) are both among the Top 100 ETFs. LQD is a iShares Corporate Bond fund and IXUS is a iShares Foreign Large Blend fund. So, what’s the difference between LQD and IXUS? And which fund is better?
The expense ratio of LQD is 0.05 percentage points higher than IXUS’s (0.14% vs. 0.09%). LQD is mostly comprised of BBB bonds while IXUS has a high exposure to the financial services sector. Overall, LQD has provided higher returns than IXUS over the past ten years.
In this article, we’ll compare LQD vs. IXUS. We’ll look at performance and holdings, as well as at their portfolio growth and industry exposure. Moreover, I’ll also discuss LQD’s and IXUS’s annual returns, fund composition, and risk metrics and examine how these affect their overall returns.
Summary
| LQD | IXUS | |
| Name | iShares iBoxx $ Investment Grade Corporate Bond ETF | iShares Core MSCI Total International Stock ETF |
| Category | Corporate Bond | Foreign Large Blend |
| Issuer | iShares | iShares |
| AUM | 40.23B | 29.54B |
| Avg. Return | 6.58% | 6.09% |
| Div. Yield | 2.48% | 2.13% |
| Expense Ratio | 0.14% | 0.09% |
The iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) is a Corporate Bond fund that is issued by iShares. It currently has 40.23B total assets under management and has yielded an average annual return of 6.58% over the past 10 years. The fund has a dividend yield of 2.48% with an expense ratio of 0.14%.
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%.
LQD’s dividend yield is 0.35% higher than that of IXUS (2.48% vs. 2.13%). Also, LQD yielded on average 0.49% more per year over the past decade (6.58% vs. 6.09%). The expense ratio of LQD is 0.05 percentage points higher than IXUS’s (0.14% vs. 0.09%).
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Fund Composition
Holdings
| LQD Bond Sectors | Weight |
| BBB | 50.92% |
| A | 37.97% |
| AA | 8.49% |
| AAA | 2.7% |
| BB | 0.05% |
| Below B | 0.0% |
| B | 0.0% |
| US Government | 0.0% |
| Others | -0.13% |
LQD’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.92%, 37.97%, 8.49%, 2.7%, and 0.05%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.
| 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%.
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Risk Analysis
| LQD | IXUS | |
| Mean Return | 0.47 | 0 |
| R-squared | 66.93 | 0 |
| Std. Deviation | 5.94 | 0 |
| Alpha | 0.52 | 0 |
| Beta | 1.62 | 0 |
| Sharpe Ratio | 0.85 | 0 |
| Treynor Ratio | 3.08 | 0 |
The iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) has a Beta of 1.62 with a Treynor Ratio of 3.08 and a R-squared of 66.93. Its Mean Return is 0.47 while LQD’s Sharpe Ratio is 0.85. Furthermore, the fund has a Alpha of 0.52 and a Standard Deviation of 5.94.
The iShares Core MSCI Total International Stock ETF (IXUS) has a Alpha of 0 with a R-squared of 0 and a Standard Deviation of 0. Its Mean Return is 0 while IXUS’s Sharpe Ratio is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Beta of 0.
LQD’s Mean Return is 0.47 points higher than that of IXUS and its R-squared is 66.93 points higher. With a Standard Deviation of 5.94, LQD is slightly more volatile than IXUS. The Alpha and Beta of LQD are 0.52 points higher and 1.62 points higher than IXUS’s Alpha and Beta.
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Performance
Annual Returns
| Year | LQD | IXUS |
| 2020 | 11.14% | 11.14% |
| 2019 | 17.13% | 21.85% |
| 2018 | -3.76% | -14.55% |
| 2017 | 7.16% | 28.08% |
| 2016 | 5.97% | 4.66% |
| 2015 | -1.08% | -4.62% |
| 2014 | 8.57% | -3.96% |
| 2013 | -2.49% | 15.85% |
| 2012 | 11.68% | 0.0% |
| 2011 | 8.89% | 0.0% |
| 2010 | 9.15% | 0.0% |
LQD had its best year in 2019 with an annual return of 17.13%. LQD’s worst year over the past decade yielded -3.76% and occurred in 2018. In most years the iShares iBoxx $ Investment Grade Corporate Bond ETF provided moderate returns such as in 2017, 2014, and 2011 where annual returns amounted to 7.16%, 8.57%, and 8.89% respectively.
The year 2017 was the strongest year for IXUS, returning 28.08% on an annual basis. The poorest year for IXUS in the last ten years was 2018, with a yield of -14.55%. Most years the iShares Core MSCI Total International Stock ETF has given investors modest returns, such as in 2011, 2010, and 2016, when gains were 0.0%, 0.0%, and 4.66% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| LQD | $10,000 | $15,279 | 6.58% |
| IXUS | $10,000 | $14,209 | 6.09% |
A $10,000 investment in LQD would have resulted in a final balance of $15,279. This is a profit of $5,279 over 7 years and amounts to a compound annual growth rate (CAGR) of 6.58%.
With a $10,000 investment in IXUS, the end total would have been $14,209. This equates to a $4,209 profit over 7 years and a compound annual growth rate (CAGR) of 6.09%.
LQD’s CAGR is 0.49 percentage points higher than that of IXUS and as a result, would have yielded $1,070 more on a $10,000 investment. Thus, LQD outperformed IXUS by 0.49% annually.
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