The iShares 1-3 Year Treasury Bond ETF (SHY) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. SHY is a iShares Short Government fund and IWN is a iShares Small Value fund. So, what’s the difference between SHY and IWN? And which fund is better?
The expense ratio of SHY is 0.09 percentage points lower than IWN’s (0.15% vs. 0.24%). SHY is mostly comprised of AAA bonds while IWN has a high exposure to the financial services sector. Overall, SHY has provided lower returns than IWN over the past 11 years.
In this article, we’ll compare SHY vs. IWN. We’ll look at annual returns and portfolio growth, as well as at their fund composition and holdings. Moreover, I’ll also discuss SHY’s and IWN’s performance, risk metrics, and industry exposure and examine how these affect their overall returns.
Summary
| SHY | IWN | |
| Name | iShares 1-3 Year Treasury Bond ETF | iShares Russell 2000 Value ETF |
| Category | Short Government | Small Value |
| Issuer | iShares | iShares |
| AUM | 19.51B | 15.48B |
| Avg. Return | 1.27% | 10.96% |
| Div. Yield | 0.46% | 1.26% |
| Expense Ratio | 0.15% | 0.24% |
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 Russell 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.
SHY’s dividend yield is 0.80% lower than that of IWN (0.46% vs. 1.26%). Also, SHY yielded on average 9.69% less per year over the past decade (1.27% vs. 10.96%). The expense ratio of SHY is 0.09 percentage points lower than IWN’s (0.15% vs. 0.24%).
Fund Composition
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.
| IWN Holdings | Weight |
| AMC Entertainment Holdings Inc Class A | 1.06% |
| Tenet Healthcare Corp | 0.47% |
| Stag Industrial Inc | 0.47% |
| Ovintiv Inc | 0.45% |
| EMCOR Group Inc | 0.42% |
| Valley National Bancorp | 0.37% |
| Chesapeake Energy Corp Ordinary Shares – New | 0.37% |
| Agree Realty Corp | 0.36% |
| Macy’s Inc | 0.35% |
| Essent Group Ltd | 0.35% |
IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.
Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.
Risk Analysis
| SHY | IWN | |
| Mean Return | 0.09 | 1.01 |
| R-squared | 39.11 | 72.64 |
| Std. Deviation | 0.89 | 19.28 |
| Alpha | -0.03 | -6.32 |
| Beta | 0.18 | 1.21 |
| Sharpe Ratio | 0.54 | 0.59 |
| Treynor Ratio | 2.6 | 8.3 |
The iShares 1-3 Year Treasury Bond ETF (SHY) has a R-squared of 39.11 with a Mean Return of 0.09 and a Alpha of -0.03. Its Beta is 0.18 while SHY’s Treynor Ratio is 2.6. Furthermore, the fund has a Sharpe Ratio of 0.54 and a Standard Deviation of 0.89.
The iShares Russell 2000 Value ETF (IWN) has a Sharpe Ratio of 0.59 with a Alpha of -6.32 and a Standard Deviation of 19.28. Its Treynor Ratio is 8.3 while IWN’s Beta is 1.21. Furthermore, the fund has a Mean Return of 1.01 and a R-squared of 72.64.
SHY’s Mean Return is 0.92 points lower than that of IWN and its R-squared is 33.53 points lower. With a Standard Deviation of 0.89, SHY is slightly less volatile than IWN. The Alpha and Beta of SHY are 6.29 points higher and 1.03 points lower than IWN’s Alpha and Beta.
Performance
Annual Returns
| Year | SHY | IWN |
| 2020 | 3.01% | 4.5% |
| 2019 | 3.42% | 22.17% |
| 2018 | 1.45% | -12.94% |
| 2017 | 0.27% | 7.73% |
| 2016 | 0.75% | 31.64% |
| 2015 | 0.43% | -7.53% |
| 2014 | 0.48% | 4.13% |
| 2013 | 0.23% | 34.3% |
| 2012 | 0.31% | 17.92% |
| 2011 | 1.43% | -5.64% |
| 2010 | 2.23% | 24.29% |
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 IWN, returning 34.3% on an annual basis. The poorest year for IWN in the last ten years was 2018, with a yield of -12.94%. Most years the iShares Russell 2000 Value ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 4.5%, 7.73%, and 17.92% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| SHY | $10,000 | $11,486 | 1.27% |
| IWN | $10,000 | $28,189 | 10.96% |
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 IWN, the end total would have been $28,189. This equates to a $18,189 profit over 11 years and a compound annual growth rate (CAGR) of 10.96%.
SHY’s CAGR is 9.69 percentage points lower than that of IWN and as a result, would have yielded $16,703 less on a $10,000 investment. Thus, SHY performed worse than IWN by 9.69% annually.
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