TIP vs. IWP: What’s The Difference?

The iShares TIPS Bond ETF (TIP) and the iShares Russell Mid-Cap Growth ETF (IWP) are both among the Top 100 ETFs. TIP is a iShares Inflation-Protected Bond fund and IWP is a iShares Mid-Cap Growth fund. So, what’s the difference between TIP and IWP? And which fund is better?

The expense ratio of TIP is 0.05 percentage points lower than IWP’s (0.19% vs. 0.24%). TIP is mostly comprised of AAA bonds while IWP has a high exposure to the technology sector. Overall, TIP has provided lower returns than IWP over the past ten years.

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

Summary

TIP IWP
Name iShares TIPS Bond ETF iShares Russell Mid-Cap Growth ETF
Category Inflation-Protected Bond Mid-Cap Growth
Issuer iShares iShares
AUM 28.3B 15.7B
Avg. Return 4.07% 16.75%
Div. Yield 1.87% 0.26%
Expense Ratio 0.19% 0.24%

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 Russell Mid-Cap Growth ETF (IWP) is a Mid-Cap Growth fund that is issued by iShares. It currently has 15.7B total assets under management and has yielded an average annual return of 16.75% over the past 10 years. The fund has a dividend yield of 0.26% with an expense ratio of 0.24%.

TIP’s dividend yield is 1.61% higher than that of IWP (1.87% vs. 0.26%). Also, TIP yielded on average 12.68% less per year over the past decade (4.07% vs. 16.75%). The expense ratio of TIP is 0.05 percentage points lower than IWP’s (0.19% vs. 0.24%).

Fund Composition

Holdings

TIP - Holdings

TIP Bond Sectors Weight
AAA 99.31%
Others 0.69%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

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.

IWP - Holdings

IWP Holdings Weight
IDEXX Laboratories Inc 1.3%
DocuSign Inc 1.3%
Roku Inc Class A 1.29%
Match Group Inc 1.06%
Chipotle Mexican Grill Inc 1.06%
Pinterest Inc 1.05%
Veeva Systems Inc Class A 1.04%
Palantir Technologies Inc Ordinary Shares – Class A 1.04%
Lululemon Athletica Inc 1.01%
DexCom Inc 1.0%

IWP’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Roku Inc Class A, Match Group Inc, and Chipotle Mexican Grill Inc at 1.3%, 1.3%, 1.29%, 1.06%, and 1.06%.

Pinterest Inc (1.05%), Veeva Systems Inc Class A (1.04%), and Palantir Technologies Inc Ordinary Shares – Class A (1.04%) have a slightly smaller but still significant weight. Lululemon Athletica Inc and DexCom Inc are also represented in the IWP’s holdings at 1.01% and 1.0%.

Risk Analysis

TIP IWP
Mean Return 0.28 1.27
R-squared 66.57 87.01
Std. Deviation 4.33 16.05
Alpha -0.58 -1.03
Beta 1.18 1.1
Sharpe Ratio 0.62 0.91
Treynor Ratio 2.24 12.98

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

The iShares Russell Mid-Cap Growth ETF (IWP) has a Standard Deviation of 16.05 with a Sharpe Ratio of 0.91 and a Alpha of -1.03. Its Beta is 1.1 while IWP’s R-squared is 87.01. Furthermore, the fund has a Mean Return of 1.27 and a Treynor Ratio of 12.98.

TIP’s Mean Return is 0.99 points lower than that of IWP and its R-squared is 20.44 points lower. With a Standard Deviation of 4.33, TIP is slightly less volatile than IWP. The Alpha and Beta of TIP are 0.45 points higher and 0.08 points higher than IWP’s Alpha and Beta.

Performance

Annual Returns

TIP vs. IWP - Annual Returns

Year TIP IWP
2020 10.91% 35.29%
2019 8.28% 35.14%
2018 -1.43% -4.95%
2017 2.92% 24.98%
2016 4.56% 7.15%
2015 -1.59% -0.39%
2014 3.49% 11.68%
2013 -8.65% 35.44%
2012 6.8% 15.62%
2011 13.4% -1.82%
2010 6.1% 26.1%

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 2013 was the strongest year for IWP, returning 35.44% on an annual basis. The poorest year for IWP in the last ten years was 2018, with a yield of -4.95%. Most years the iShares Russell Mid-Cap Growth ETF has given investors modest returns, such as in 2014, 2012, and 2017, when gains were 11.68%, 15.62%, and 24.98% respectively.

Portfolio Growth

TIP vs. IWP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
TIP $10,000 $15,229 4.07%
IWP $10,000 $50,191 16.75%

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 IWP, the end total would have been $50,191. This equates to a $40,191 profit over 11 years and a compound annual growth rate (CAGR) of 16.75%.

TIP’s CAGR is 12.68 percentage points lower than that of IWP and as a result, would have yielded $34,962 less on a $10,000 investment. Thus, TIP performed worse than IWP by 12.68% annually.


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