The SPDR S&P Dividend ETF (SDY) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. SDY is a SPDR State Street Global Advisors Large Value fund and TLT is a iShares Long Government fund. So, what’s the difference between SDY and TLT? And which fund is better?
The expense ratio of SDY is 0.20 percentage points higher than TLT’s (0.35% vs. 0.15%). SDY also has a high exposure to the financial services sector while TLT is mostly comprised of AAA bonds. Overall, SDY has provided higher returns than TLT over the past 11 years.
In this article, we’ll compare SDY vs. TLT. We’ll look at performance and industry exposure, as well as at their holdings and portfolio growth. Moreover, I’ll also discuss SDY’s and TLT’s annual returns, risk metrics, and fund composition and examine how these affect their overall returns.
|Name||SPDR S&P Dividend ETF||iShares 20+ Year Treasury Bond ETF|
|Category||Large Value||Long 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 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%.
SDY’s dividend yield is 1.15% higher than that of TLT (2.65% vs. 1.5%). Also, SDY yielded on average 3.44% more per year over the past decade (12.44% vs. 9.00%). The expense ratio of SDY is 0.20 percentage points higher than TLT’s (0.35% vs. 0.15%).
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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%.
|TLT Bond Sectors||Weight|
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.
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The SPDR S&P Dividend ETF (SDY) has a Beta of 0.87 with a Standard Deviation of 12.9 and a Sharpe Ratio of 0.95. Its Alpha is -0.1 while SDY’s R-squared is 83.62. Furthermore, the fund has a Treynor Ratio of 13.94 and a Mean Return of 1.07.
The iShares 20+ Year Treasury Bond ETF (TLT) has a Mean Return of 0.63 with a Beta of 3.54 and a Standard Deviation of 12.76. Its Alpha is -2.83 while TLT’s R-squared is 68.76. Furthermore, the fund has a Treynor Ratio of 1.82 and a Sharpe Ratio of 0.55.
SDY’s Mean Return is 0.44 points higher than that of TLT and its R-squared is 14.86 points higher. With a Standard Deviation of 12.9, SDY is slightly more volatile than TLT. The Alpha and Beta of SDY are 2.73 points higher and 2.67 points lower than TLT’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 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in SDY would have resulted in a final balance of $34,806. This is a profit of $24,806 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.44%.
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%.
SDY’s CAGR is 3.44 percentage points higher than that of TLT and as a result, would have yielded $10,997 more on a $10,000 investment. Thus, SDY outperformed TLT by 3.44% annually.
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