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SHY vs. IWS: What’s The Difference?

The iShares 1-3 Year Treasury Bond ETF (SHY) and the iShares Russell Mid-Cap Value ETF (IWS) are both among the Top 100 ETFs. SHY is a iShares Short Government fund and IWS is a iShares Mid-Cap Value fund. So, what’s the difference between SHY and IWS? And which fund is better?

The expense ratio of SHY is 0.08 percentage points lower than IWS’s (0.15% vs. 0.23%). SHY is mostly comprised of AAA bonds while IWS has a high exposure to the financial services sector. Overall, SHY has provided lower returns than IWS over the past 11 years.

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

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Summary

SHYIWS
NameiShares 1-3 Year Treasury Bond ETFiShares Russell Mid-Cap Value ETF
CategoryShort GovernmentMid-Cap Value
IssueriSharesiShares
AUM19.51B14.24B
Avg. Return1.27%12.35%
Div. Yield0.46%1.34%
Expense Ratio0.15%0.23%

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 Mid-Cap Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

SHY’s dividend yield is 0.88% lower than that of IWS (0.46% vs. 1.34%). Also, SHY yielded on average 11.07% less per year over the past decade (1.27% vs. 12.35%). The expense ratio of SHY is 0.08 percentage points lower than IWS’s (0.15% vs. 0.23%).

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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.

IWS - Holdings

IWS HoldingsWeight
Twitter Inc0.69%
Marvell Technology Inc0.69%
IHS Markit Ltd0.62%
Prudential Financial Inc0.56%
Otis Worldwide Corp Ordinary Shares0.54%
International Flavors & Fragrances Inc0.53%
Xcel Energy Inc0.52%
Motorola Solutions Inc0.52%
Aptiv PLC0.52%
Aflac Inc0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

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Risk Analysis

SHYIWS
Mean Return0.091.06
R-squared39.1187.04
Std. Deviation0.8916.03
Alpha-0.03-4.11
Beta0.181.1
Sharpe Ratio0.540.75
Treynor Ratio2.610.3

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

The iShares Russell Mid-Cap Value ETF (IWS) has a Mean Return of 1.06 with a Standard Deviation of 16.03 and a Beta of 1.1. Its R-squared is 87.04 while IWS’s Sharpe Ratio is 0.75. Furthermore, the fund has a Treynor Ratio of 10.3 and a Alpha of -4.11.

SHY’s Mean Return is 0.97 points lower than that of IWS and its R-squared is 47.93 points lower. With a Standard Deviation of 0.89, SHY is slightly less volatile than IWS. The Alpha and Beta of SHY are 4.08 points higher and 0.92 points lower than IWS’s Alpha and Beta.

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Performance

Annual Returns

SHY vs. IWS - Annual Returns

YearSHYIWS
20203.01%4.76%
20193.42%26.78%
20181.45%-12.36%
20170.27%13.1%
20160.75%19.69%
20150.43%-4.93%
20140.48%14.49%
20130.23%33.11%
20120.31%18.27%
20111.43%-1.55%
20102.23%24.46%

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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

SHY vs. IWS - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
SHY$10,000$11,4861.27%
IWS$10,000$33,08312.35%

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 IWS, the end total would have been $33,083. This equates to a $23,083 profit over 11 years and a compound annual growth rate (CAGR) of 12.35%.

SHY’s CAGR is 11.07 percentage points lower than that of IWS and as a result, would have yielded $21,597 less on a $10,000 investment. Thus, SHY performed worse than IWS by 11.07% annually.


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