The iShares 1-3 Year Treasury Bond ETF (SHY) and the iShares MSCI USA Value Factor ETF (VLUE) are both among the Top 100 ETFs. SHY is a iShares Short Government fund and VLUE is a iShares Large Value fund. So, what’s the difference between SHY and VLUE? And which fund is better?
SHY and VLUE have the same expense ratio: 0.15%. SHY is mostly comprised of AAA bonds while VLUE has a high exposure to the technology sector. Overall, SHY has provided lower returns than VLUE over the past 7 years.
In this article, we’ll compare SHY vs. VLUE. We’ll look at holdings and performance, as well as at their annual returns and industry exposure. Moreover, I’ll also discuss SHY’s and VLUE’s risk metrics, fund composition, and portfolio growth and examine how these affect their overall returns.
|Name||iShares 1-3 Year Treasury Bond ETF||iShares MSCI USA Value Factor ETF|
|Category||Short Government||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 USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.
SHY’s dividend yield is 1.43% lower than that of VLUE (0.46% vs. 1.89%). Also, SHY yielded on average 7.64% less per year over the past decade (1.27% vs. 8.91%). SHY and VLUE have the same expense ratio: 0.15%.
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|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.
|General Motors Co||3.19%|
|Micron Technology Inc||3.14%|
|Cisco Systems Inc||3.05%|
|International Business Machines Corp||2.76%|
|Ford Motor Co||2.23%|
VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.
International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.
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The iShares 1-3 Year Treasury Bond ETF (SHY) has a Standard Deviation of 0.89 with a Mean Return of 0.09 and a Sharpe Ratio of 0.54. Its Beta is 0.18 while SHY’s Alpha is -0.03. Furthermore, the fund has a Treynor Ratio of 2.6 and a R-squared of 39.11.
The iShares MSCI USA Value Factor ETF (VLUE) has a Mean Return of 0 with a Sharpe Ratio of 0 and a Standard Deviation of 0. Its Alpha is 0 while VLUE’s Beta is 0. Furthermore, the fund has a R-squared of 0 and a Treynor Ratio of 0.
SHY’s Mean Return is 0.09 points higher than that of VLUE and its R-squared is 39.11 points higher. With a Standard Deviation of 0.89, SHY is slightly more volatile than VLUE. The Alpha and Beta of SHY are 0.03 points lower and 0.18 points higher than VLUE’s Alpha and Beta.
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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 VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in SHY would have resulted in a final balance of $11,017. This is a profit of $1,017 over 7 years and amounts to a compound annual growth rate (CAGR) of 1.27%.
With a $10,000 investment in VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.
SHY’s CAGR is 7.64 percentage points lower than that of VLUE and as a result, would have yielded $6,230 less on a $10,000 investment. Thus, SHY performed worse than VLUE by 7.64% annually.
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