TIP vs. IXUS: What’s The Difference?

The iShares TIPS Bond ETF (TIP) and the iShares Core MSCI Total International Stock ETF (IXUS) are both among the Top 100 ETFs. TIP is a iShares Inflation-Protected Bond fund and IXUS is a iShares Foreign Large Blend fund. So, what’s the difference between TIP and IXUS? And which fund is better?

The expense ratio of TIP is 0.10 percentage points higher than IXUS’s (0.19% vs. 0.09%). TIP is mostly comprised of AAA bonds while IXUS has a high exposure to the financial services sector. Overall, TIP has provided lower returns than IXUS over the past ten years.

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

Summary

TIP IXUS
Name iShares TIPS Bond ETF iShares Core MSCI Total International Stock ETF
Category Inflation-Protected Bond Foreign Large Blend
Issuer iShares iShares
AUM 28.3B 29.54B
Avg. Return 4.07% 6.09%
Div. Yield 1.87% 2.13%
Expense Ratio 0.19% 0.09%

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 Core MSCI Total International Stock ETF (IXUS) is a Foreign Large Blend fund that is issued by iShares. It currently has 29.54B total assets under management and has yielded an average annual return of 6.09% over the past 10 years. The fund has a dividend yield of 2.13% with an expense ratio of 0.09%.

TIP’s dividend yield is 0.26% lower than that of IXUS (1.87% vs. 2.13%). Also, TIP yielded on average 2.01% less per year over the past decade (4.07% vs. 6.09%). The expense ratio of TIP is 0.10 percentage points higher than IXUS’s (0.19% vs. 0.09%).

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.

IXUS - Holdings

IXUS Holdings Weight
Taiwan Semiconductor Manufacturing Co Ltd 1.64%
Tencent Holdings Ltd 1.35%
Alibaba Group Holding Ltd Ordinary Shares 1.34%
Nestle SA 1.1%
Samsung Electronics Co Ltd 1.06%
ASML Holding NV 0.9%
Roche Holding AG 0.81%
LVMH Moet Hennessy Louis Vuitton SE 0.67%
Novartis AG 0.62%
Toyota Motor Corp 0.59%

IXUS’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, and Samsung Electronics Co Ltd at 1.64%, 1.35%, 1.34%, 1.1%, and 1.06%.

ASML Holding NV (0.9%), Roche Holding AG (0.81%), and LVMH Moet Hennessy Louis Vuitton SE (0.67%) have a slightly smaller but still significant weight. Novartis AG and Toyota Motor Corp are also represented in the IXUS’s holdings at 0.62% and 0.59%.

Risk Analysis

TIP IXUS
Mean Return 0.28 0
R-squared 66.57 0
Std. Deviation 4.33 0
Alpha -0.58 0
Beta 1.18 0
Sharpe Ratio 0.62 0
Treynor Ratio 2.24 0

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

The iShares Core MSCI Total International Stock ETF (IXUS) has a Standard Deviation of 0 with a Beta of 0 and a Alpha of 0. Its Treynor Ratio is 0 while IXUS’s R-squared is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Mean Return of 0.

TIP’s Mean Return is 0.28 points higher than that of IXUS and its R-squared is 66.57 points higher. With a Standard Deviation of 4.33, TIP is slightly more volatile than IXUS. The Alpha and Beta of TIP are 0.58 points lower and 1.18 points higher than IXUS’s Alpha and Beta.

Performance

Annual Returns

TIP vs. IXUS - Annual Returns

Year TIP IXUS
2020 10.91% 11.14%
2019 8.28% 21.85%
2018 -1.43% -14.55%
2017 2.92% 28.08%
2016 4.56% 4.66%
2015 -1.59% -4.62%
2014 3.49% -3.96%
2013 -8.65% 15.85%
2012 6.8% 0.0%
2011 13.4% 0.0%
2010 6.1% 0.0%

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 2017 was the strongest year for IXUS, returning 28.08% on an annual basis. The poorest year for IXUS in the last ten years was 2018, with a yield of -14.55%. Most years the iShares Core MSCI Total International Stock ETF has given investors modest returns, such as in 2011, 2010, and 2016, when gains were 0.0%, 0.0%, and 4.66% respectively.

Portfolio Growth

TIP vs. IXUS - Portfolio Growth

Fund Initial Balance Final Balance CAGR
TIP $10,000 $12,973 4.07%
IXUS $10,000 $14,209 6.09%

A $10,000 investment in TIP would have resulted in a final balance of $12,973. This is a profit of $2,973 over 7 years and amounts to a compound annual growth rate (CAGR) of 4.07%.

With a $10,000 investment in IXUS, the end total would have been $14,209. This equates to a $4,209 profit over 7 years and a compound annual growth rate (CAGR) of 6.09%.

TIP’s CAGR is 2.01 percentage points lower than that of IXUS and as a result, would have yielded $1,236 less on a $10,000 investment. Thus, TIP performed worse than IXUS by 2.01% annually.


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