The iShares 1-3 Year Treasury Bond ETF (SHY) and the iShares MSCI EAFE Value ETF (EFV) are both among the Top 100 ETFs. SHY is a iShares Short Government fund and EFV is a iShares Foreign Large Value fund. So, what’s the difference between SHY and EFV? And which fund is better?
The expense ratio of SHY is 0.24 percentage points lower than EFV’s (0.15% vs. 0.39%). SHY is mostly comprised of AAA bonds while EFV has a high exposure to the financial services sector. Overall, SHY has provided lower returns than EFV over the past 11 years.
In this article, we’ll compare SHY vs. EFV. We’ll look at risk metrics and portfolio growth, as well as at their holdings and industry exposure. Moreover, I’ll also discuss SHY’s and EFV’s performance, fund composition, and annual returns and examine how these affect their overall returns.
|Name||iShares 1-3 Year Treasury Bond ETF||iShares MSCI EAFE Value ETF|
|Category||Short Government||Foreign Large Value|
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 EAFE Value ETF (EFV) is a Foreign Large Value fund that is issued by iShares. It currently has 14.37B total assets under management and has yielded an average annual return of 3.99% over the past 10 years. The fund has a dividend yield of 2.94% with an expense ratio of 0.39%.
SHY’s dividend yield is 2.48% lower than that of EFV (0.46% vs. 2.94%). Also, SHY yielded on average 2.72% less per year over the past decade (1.27% vs. 3.99%). The expense ratio of SHY is 0.24 percentage points lower than EFV’s (0.15% vs. 0.39%).
|SHY Bond Sectors||Weight|
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.
|Toyota Motor Corp||2.21%|
|Commonwealth Bank of Australia||1.59%|
|HSBC Holdings PLC||1.4%|
|Rio Tinto PLC||1.1%|
EFV’s Top Holdings are Novartis AG, Toyota Motor Corp, Commonwealth Bank of Australia, Siemens AG, and Sanofi SA at 2.41%, 2.21%, 1.59%, 1.45%, and 1.42%.
HSBC Holdings PLC (1.4%), TotalEnergies SE (1.35%), and Allianz SE (1.23%) have a slightly smaller but still significant weight. GlaxoSmithKline PLC and Rio Tinto PLC are also represented in the EFV’s holdings at 1.18% and 1.1%.
The iShares 1-3 Year Treasury Bond ETF (SHY) has a Standard Deviation of 0.89 with a Treynor Ratio of 2.6 and a R-squared of 39.11. Its Mean Return is 0.09 while SHY’s Sharpe Ratio is 0.54. Furthermore, the fund has a Alpha of -0.03 and a Beta of 0.18.
The iShares MSCI EAFE Value ETF (EFV) has a Beta of 1.05 with a Treynor Ratio of 2.92 and a Standard Deviation of 16.53. Its Mean Return is 0.42 while EFV’s Alpha is -1.77. Furthermore, the fund has a R-squared of 92.15 and a Sharpe Ratio of 0.26.
SHY’s Mean Return is 0.33 points lower than that of EFV and its R-squared is 53.04 points lower. With a Standard Deviation of 0.89, SHY is slightly less volatile than EFV. The Alpha and Beta of SHY are 1.74 points higher and 0.87 points lower than EFV’s Alpha and Beta.
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 2013 was the strongest year for EFV, returning 22.61% on an annual basis. The poorest year for EFV in the last ten years was 2018, with a yield of -14.88%. Most years the iShares MSCI EAFE Value ETF has given investors modest returns, such as in 2020, 2010, and 2016, when gains were -2.78%, 3.18%, and 4.87% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 EFV, the end total would have been $14,134. This equates to a $4,134 profit over 11 years and a compound annual growth rate (CAGR) of 3.99%.
SHY’s CAGR is 2.72 percentage points lower than that of EFV and as a result, would have yielded $2,648 less on a $10,000 investment. Thus, SHY performed worse than EFV by 2.72% annually.
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