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TIP vs. IVE: What’s The Difference?

The iShares TIPS Bond ETF (TIP) and the iShares S&P 500 Value ETF (IVE) are both among the Top 100 ETFs. TIP is a iShares Inflation-Protected Bond fund and IVE is a iShares Large Value fund. So, what’s the difference between TIP and IVE? And which fund is better?

The expense ratio of TIP is 0.01 percentage points higher than IVE’s (0.19% vs. 0.18%). TIP is mostly comprised of AAA bonds while IVE has a high exposure to the financial services sector. Overall, TIP has provided lower returns than IVE over the past ten years.

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

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Summary

TIPIVE
NameiShares TIPS Bond ETFiShares S&P 500 Value ETF
CategoryInflation-Protected BondLarge Value
IssueriSharesiShares
AUM28.3B22.4B
Avg. Return4.07%11.68%
Div. Yield1.87%1.88%
Expense Ratio0.19%0.18%

The iShares TIPS Bond ETF (TIP) is a Inflation-Protected Bond fund that is issued by iShares. It currently has 28.3B total assets under management and has yielded an average annual return of 4.07% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.19%.

The iShares S&P 500 Value ETF (IVE) is a Large Value fund that is issued by iShares. It currently has 22.4B total assets under management and has yielded an average annual return of 11.68% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.18%.

TIP’s dividend yield is 0.01% lower than that of IVE (1.87% vs. 1.88%). Also, TIP yielded on average 7.61% less per year over the past decade (4.07% vs. 11.68%). The expense ratio of TIP is 0.01 percentage points higher than IVE’s (0.19% vs. 0.18%).

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Fund Composition

Holdings

TIP - Holdings

TIP Bond SectorsWeight
AAA99.31%
Others0.69%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

TIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.31%, 0.69%, 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.

IVE - Holdings

IVE HoldingsWeight
Berkshire Hathaway Inc Class B3.05%
JPMorgan Chase & Co2.65%
The Walt Disney Co1.85%
Bank of America Corp1.67%
Johnson & Johnson1.57%
Exxon Mobil Corp1.41%
Pfizer Inc1.38%
Cisco Systems Inc1.35%
Verizon Communications Inc1.33%
Intel Corp1.25%

IVE’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, The Walt Disney Co, Bank of America Corp, and Johnson & Johnson at 3.05%, 2.65%, 1.85%, 1.67%, and 1.57%.

Exxon Mobil Corp (1.41%), Pfizer Inc (1.38%), and Cisco Systems Inc (1.35%) have a slightly smaller but still significant weight. Verizon Communications Inc and Intel Corp are also represented in the IVE’s holdings at 1.33% and 1.25%.

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Risk Analysis

TIPIVE
Mean Return0.281.05
R-squared66.5792.08
Std. Deviation4.3314.3
Alpha-0.58-2.9
Beta1.181.01
Sharpe Ratio0.620.83
Treynor Ratio2.2411.41

The iShares TIPS Bond ETF (TIP) has a Alpha of -0.58 with a Standard Deviation of 4.33 and a Mean Return of 0.28. Its R-squared is 66.57 while TIP’s Beta is 1.18. Furthermore, the fund has a Sharpe Ratio of 0.62 and a Treynor Ratio of 2.24.

The iShares S&P 500 Value ETF (IVE) has a Mean Return of 1.05 with a Treynor Ratio of 11.41 and a Sharpe Ratio of 0.83. Its Beta is 1.01 while IVE’s Standard Deviation is 14.3. Furthermore, the fund has a Alpha of -2.9 and a R-squared of 92.08.

TIP’s Mean Return is 0.77 points lower than that of IVE and its R-squared is 25.51 points lower. With a Standard Deviation of 4.33, TIP is slightly less volatile than IVE. The Alpha and Beta of TIP are 2.32 points higher and 0.17 points higher than IVE’s Alpha and Beta.

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Performance

Annual Returns

TIP vs. IVE - Annual Returns

YearTIPIVE
202010.91%1.24%
20198.28%31.71%
2018-1.43%-9.09%
20172.92%15.19%
20164.56%17.17%
2015-1.59%-3.24%
20143.49%12.14%
2013-8.65%31.69%
20126.8%17.45%
201113.4%-0.63%
20106.1%14.9%

TIP had its best year in 2011 with an annual return of 13.4%. TIP’s worst year over the past decade yielded -8.65% and occurred in 2013. In most years the iShares TIPS Bond ETF provided moderate returns such as in 2014, 2016, and 2010 where annual returns amounted to 3.49%, 4.56%, and 6.1% respectively.

The year 2019 was the strongest year for IVE, returning 31.71% on an annual basis. The poorest year for IVE in the last ten years was 2018, with a yield of -9.09%. Most years the iShares S&P 500 Value ETF has given investors modest returns, such as in 2014, 2010, and 2017, when gains were 12.14%, 14.9%, and 15.19% respectively.

Portfolio Growth

TIP vs. IVE - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
TIP$10,000$15,2294.07%
IVE$10,000$31,35011.68%

A $10,000 investment in TIP would have resulted in a final balance of $15,229. This is a profit of $5,229 over 11 years and amounts to a compound annual growth rate (CAGR) of 4.07%.

With a $10,000 investment in IVE, the end total would have been $31,350. This equates to a $21,350 profit over 11 years and a compound annual growth rate (CAGR) of 11.68%.

TIP’s CAGR is 7.61 percentage points lower than that of IVE and as a result, would have yielded $16,121 less on a $10,000 investment. Thus, TIP performed worse than IVE by 7.61% annually.


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