SHY vs. ACWI: What’s The Difference?

The iShares 1-3 Year Treasury Bond ETF (SHY) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. SHY is a iShares Short Government fund and ACWI is a iShares N/A fund. So, what’s the difference between SHY and ACWI? And which fund is better?

The expense ratio of SHY is 0.17 percentage points lower than ACWI’s (0.15% vs. 0.32%). SHY is mostly comprised of AAA bonds while ACWI has a high exposure to the technology sector. Overall, SHY has provided lower returns than ACWI over the past 11 years.

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

Summary

SHY ACWI
Name iShares 1-3 Year Treasury Bond ETF iShares MSCI ACWI ETF
Category Short Government N/A
Issuer iShares iShares
AUM 19.51B 16.85B
Avg. Return 1.27% 10.21%
Div. Yield 0.46% 1.39%
Expense Ratio 0.15% 0.32%

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%.

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

SHY’s dividend yield is 0.93% lower than that of ACWI (0.46% vs. 1.39%). Also, SHY yielded on average 8.94% less per year over the past decade (1.27% vs. 10.21%). The expense ratio of SHY is 0.17 percentage points lower than ACWI’s (0.15% vs. 0.32%).

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Fund Composition

Holdings

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.

ACWI - Holdings

ACWI Holdings Weight
Apple Inc 3.44%
Microsoft Corp 2.91%
Amazon.com Inc 2.21%
Facebook Inc A 1.25%
Alphabet Inc Class C 1.12%
Alphabet Inc A 1.09%
Taiwan Semiconductor Manufacturing Co Ltd 0.79%
Tesla Inc 0.78%
NVIDIA Corp 0.74%
JPMorgan Chase & Co 0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

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Risk Analysis

SHY ACWI
Mean Return 0.09 0.89
R-squared 39.11 99.96
Std. Deviation 0.89 14.05
Alpha -0.03 0.15
Beta 0.18 1
Sharpe Ratio 0.54 0.71
Treynor Ratio 2.6 9.45

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

The iShares MSCI ACWI ETF (ACWI) has a Standard Deviation of 14.05 with a Sharpe Ratio of 0.71 and a Mean Return of 0.89. Its Alpha is 0.15 while ACWI’s Beta is 1. Furthermore, the fund has a R-squared of 99.96 and a Treynor Ratio of 9.45.

SHY’s Mean Return is 0.80 points lower than that of ACWI and its R-squared is 60.85 points lower. With a Standard Deviation of 0.89, SHY is slightly less volatile than ACWI. The Alpha and Beta of SHY are 0.18 points lower and 0.82 points lower than ACWI’s Alpha and Beta.

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Performance

Annual Returns

SHY vs. ACWI - Annual Returns

Year SHY ACWI
2020 3.01% 16.38%
2019 3.42% 26.7%
2018 1.45% -9.15%
2017 0.27% 24.35%
2016 0.75% 8.22%
2015 0.43% -2.39%
2014 0.48% 4.64%
2013 0.23% 22.91%
2012 0.31% 15.99%
2011 1.43% -7.6%
2010 2.23% 12.31%

SHY had its best year in 2019 with an annual return of 3.42%. SHY’s worst year over the past decade yielded 0.23% and occurred in 2013. In most years the iShares 1-3 Year Treasury Bond ETF provided moderate returns such as in 2014, 2016, and 2011 where annual returns amounted to 0.48%, 0.75%, and 1.43% respectively.

The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.

Portfolio Growth

SHY vs. ACWI - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SHY $10,000 $11,486 1.27%
ACWI $10,000 $27,241 10.21%

A $10,000 investment in SHY would have resulted in a final balance of $11,486. This is a profit of $1,486 over 11 years and amounts to a compound annual growth rate (CAGR) of 1.27%.

With a $10,000 investment in ACWI, the end total would have been $27,241. This equates to a $17,241 profit over 11 years and a compound annual growth rate (CAGR) of 10.21%.

SHY’s CAGR is 8.94 percentage points lower than that of ACWI and as a result, would have yielded $15,755 less on a $10,000 investment. Thus, SHY performed worse than ACWI by 8.94% annually.


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