The iShares TIPS Bond ETF (TIP) and the iShares Russell Mid-Cap ETF (IWR) are both among the Top 100 ETFs. TIP is a iShares Inflation-Protected Bond fund and IWR is a iShares Mid-Cap Blend fund. So, what’s the difference between TIP and IWR? And which fund is better?
TIP and IWR have the same expense ratio: 0.19%. TIP is mostly comprised of AAA bonds while IWR has a high exposure to the technology sector. Overall, TIP has provided lower returns than IWR over the past ten years.
In this article, we’ll compare TIP vs. IWR. We’ll look at risk metrics and fund composition, as well as at their portfolio growth and performance. Moreover, I’ll also discuss TIP’s and IWR’s holdings, annual returns, and industry exposure and examine how these affect their overall returns.
|Name||iShares TIPS Bond ETF||iShares Russell Mid-Cap ETF|
|Category||Inflation-Protected Bond||Mid-Cap Blend|
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 ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% with an expense ratio of 0.19%.
TIP’s dividend yield is 0.88% higher than that of IWR (1.87% vs. 0.99%). Also, TIP yielded on average 10.08% less per year over the past decade (4.07% vs. 14.15%). TIP and IWR have the same expense ratio: 0.19%.
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|TIP Bond Sectors||Weight|
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.
|IDEXX Laboratories Inc||0.51%|
|Chipotle Mexican Grill Inc||0.47%|
|Roku Inc Class A||0.44%|
|Marvell Technology Inc||0.44%|
|Trane Technologies PLC||0.43%|
|Carrier Global Corp Ordinary Shares||0.43%|
IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.
Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.
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The iShares TIPS Bond ETF (TIP) has a R-squared of 66.57 with a Treynor Ratio of 2.24 and a Mean Return of 0.28. Its Sharpe Ratio is 0.62 while TIP’s Standard Deviation is 4.33. Furthermore, the fund has a Beta of 1.18 and a Alpha of -0.58.
The iShares Russell Mid-Cap ETF (IWR) has a Treynor Ratio of 11.72 with a Beta of 1.11 and a Mean Return of 1.17. Its Standard Deviation is 15.66 while IWR’s Sharpe Ratio is 0.86. Furthermore, the fund has a Alpha of -2.8 and a R-squared of 91.52.
TIP’s Mean Return is 0.89 points lower than that of IWR and its R-squared is 24.95 points lower. With a Standard Deviation of 4.33, TIP is slightly less volatile than IWR. The Alpha and Beta of TIP are 2.22 points higher and 0.07 points higher than IWR’s Alpha and Beta.
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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 IWR, returning 34.5% on an annual basis. The poorest year for IWR in the last ten years was 2018, with a yield of -9.13%. Most years the iShares Russell Mid-Cap ETF has given investors modest returns, such as in 2016, 2020, and 2012, when gains were 13.58%, 16.91%, and 17.13% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 IWR, the end total would have been $39,751. This equates to a $29,751 profit over 11 years and a compound annual growth rate (CAGR) of 14.15%.
TIP’s CAGR is 10.08 percentage points lower than that of IWR and as a result, would have yielded $24,522 less on a $10,000 investment. Thus, TIP performed worse than IWR by 10.08% annually.
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