The SPDR S&P Dividend ETF (SDY) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. SDY is a SPDR State Street Global Advisors Large Value fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between SDY and GOVT? And which fund is better?
The expense ratio of SDY is 0.30 percentage points higher than GOVT’s (0.35% vs. 0.05%). SDY also has a high exposure to the financial services sector while GOVT is mostly comprised of AAA bonds. Overall, SDY has provided higher returns than GOVT over the past 8 years.
In this article, we’ll compare SDY vs. GOVT. We’ll look at annual returns and industry exposure, as well as at their holdings and fund composition. Moreover, I’ll also discuss SDY’s and GOVT’s performance, risk metrics, and portfolio growth and examine how these affect their overall returns.
|Name||SPDR S&P Dividend ETF||iShares U.S. Treasury Bond ETF|
|Category||Large Value||Intermediate Government|
|Issuer||SPDR State Street Global Advisors||iShares|
The SPDR S&P Dividend ETF (SDY) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 19.67B total assets under management and has yielded an average annual return of 12.44% over the past 10 years. The fund has a dividend yield of 2.65% with an expense ratio of 0.35%.
The iShares U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.
SDY’s dividend yield is 1.65% higher than that of GOVT (2.65% vs. 1.0%). Also, SDY yielded on average 9.76% more per year over the past decade (12.44% vs. 2.67%). The expense ratio of SDY is 0.30 percentage points higher than GOVT’s (0.35% vs. 0.05%).
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|Exxon Mobil Corp||2.81%|
|South Jersey Industries Inc||2.22%|
|International Business Machines Corp||2.0%|
|National Retail Properties Inc||1.86%|
|Federal Realty Investment Trust||1.77%|
|Realty Income Corp||1.7%|
|Old Republic International Corp||1.65%|
SDY’s Top Holdings are Exxon Mobil Corp, AT&T Inc, South Jersey Industries Inc, Chevron Corp, and International Business Machines Corp at 2.81%, 2.5%, 2.22%, 2.02%, and 2.0%.
AbbVie Inc (1.93%), National Retail Properties Inc (1.86%), and Federal Realty Investment Trust (1.77%) have a slightly smaller but still significant weight. Realty Income Corp and Old Republic International Corp are also represented in the SDY’s holdings at 1.7% and 1.65%.
|GOVT Bond Sectors||Weight|
GOVT’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.
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The SPDR S&P Dividend ETF (SDY) has a Treynor Ratio of 13.94 with a Standard Deviation of 12.9 and a Sharpe Ratio of 0.95. Its R-squared is 83.62 while SDY’s Mean Return is 1.07. Furthermore, the fund has a Alpha of -0.1 and a Beta of 0.87.
The iShares U.S. Treasury Bond ETF (GOVT) has a Sharpe Ratio of 0 with a Standard Deviation of 0 and a Alpha of 0. Its R-squared is 0 while GOVT’s Beta is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Mean Return of 0.
SDY’s Mean Return is 1.07 points higher than that of GOVT and its R-squared is 83.62 points higher. With a Standard Deviation of 12.9, SDY is slightly more volatile than GOVT. The Alpha and Beta of SDY are 0.10 points lower and 0.87 points higher than GOVT’s Alpha and Beta.
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SDY had its best year in 2013 with an annual return of 30.09%. SDY’s worst year over the past decade yielded -2.73% and occurred in 2018. In most years the SPDR S&P Dividend ETF provided moderate returns such as in 2012, 2014, and 2017 where annual returns amounted to 11.51%, 13.8%, and 15.84% respectively.
The year 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in SDY would have resulted in a final balance of $24,994. This is a profit of $14,994 over 8 years and amounts to a compound annual growth rate (CAGR) of 12.44%.
With a $10,000 investment in GOVT, the end total would have been $12,297. This equates to a $2,297 profit over 8 years and a compound annual growth rate (CAGR) of 2.67%.
SDY’s CAGR is 9.76 percentage points higher than that of GOVT and as a result, would have yielded $12,697 more on a $10,000 investment. Thus, SDY outperformed GOVT by 9.76% annually.
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