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SHY vs. IUSB: What’s The Difference?

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

The expense ratio of SHY is 0.09 percentage points higher than IUSB’s (0.15% vs. 0.06%). SHY is mostly comprised of AAA bonds and IUSB has a high exposure to AAA bond. Overall, SHY has provided lower returns than IUSB over the past 6 years.

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

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Summary

SHYIUSB
NameiShares 1-3 Year Treasury Bond ETFiShares Core Total USD Bond Market ETF
CategoryShort GovernmentN/A
IssueriSharesiShares
AUM19.51B14.49B
Avg. Return1.27%4.13%
Div. Yield0.46%2.1%
Expense Ratio0.15%0.06%

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 Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.

SHY’s dividend yield is 1.64% lower than that of IUSB (0.46% vs. 2.1%). Also, SHY yielded on average 2.85% less per year over the past decade (1.27% vs. 4.13%). The expense ratio of SHY is 0.09 percentage points higher than IUSB’s (0.15% vs. 0.06%).

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Fund Composition

Holdings

SHY - Holdings

SHY Bond SectorsWeight
AAA99.67%
Others0.33%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

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.

IUSB - Holdings

IUSB Bond SectorsWeight
AAA58.32%
BBB16.98%
A12.27%
BB4.33%
AA3.36%
B2.8%
Others1.01%
Below B0.92%
US Government0.0%

IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.

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Risk Analysis

SHYIUSB
Mean Return0.090
R-squared39.110
Std. Deviation0.890
Alpha-0.030
Beta0.180
Sharpe Ratio0.540
Treynor Ratio2.60

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

The iShares Core Total USD Bond Market ETF (IUSB) has a Treynor Ratio of 0 with a Alpha of 0 and a Mean Return of 0. Its Beta is 0 while IUSB’s Sharpe Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a R-squared of 0.

SHY’s Mean Return is 0.09 points higher than that of IUSB and its R-squared is 39.11 points higher. With a Standard Deviation of 0.89, SHY is slightly more volatile than IUSB. The Alpha and Beta of SHY are 0.03 points lower and 0.18 points higher than IUSB’s Alpha and Beta.

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Performance

Annual Returns

SHY vs. IUSB - Annual Returns

YearSHYIUSB
20203.01%7.59%
20193.42%9.26%
20181.45%-0.38%
20170.27%4.06%
20160.75%3.78%
20150.43%0.46%
20140.48%0.0%
20130.23%0.0%
20120.31%0.0%
20111.43%0.0%
20102.23%0.0%

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 IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.

Portfolio Growth

SHY vs. IUSB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
SHY$10,000$10,9651.27%
IUSB$10,000$12,7044.13%

A $10,000 investment in SHY would have resulted in a final balance of $10,965. This is a profit of $965 over 6 years and amounts to a compound annual growth rate (CAGR) of 1.27%.

With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.

SHY’s CAGR is 2.85 percentage points lower than that of IUSB and as a result, would have yielded $1,739 less on a $10,000 investment. Thus, SHY performed worse than IUSB by 2.85% annually.


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