The iShares 20+ Year Treasury Bond ETF (TLT) and the iShares Russell Mid-Cap Value ETF (IWS) are both among the Top 100 ETFs. TLT is a iShares Long Government fund and IWS is a iShares Mid-Cap Value fund. So, what’s the difference between TLT and IWS? And which fund is better?
The expense ratio of TLT is 0.08 percentage points lower than IWS’s (0.15% vs. 0.23%). TLT is mostly comprised of AAA bonds while IWS has a high exposure to the financial services sector. Overall, TLT has provided lower returns than IWS over the past 11 years.
In this article, we’ll compare TLT vs. IWS. We’ll look at fund composition and risk metrics, as well as at their industry exposure and performance. Moreover, I’ll also discuss TLT’s and IWS’s holdings, portfolio growth, and annual returns and examine how these affect their overall returns.
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Summary
| TLT | IWS | |
| Name | iShares 20+ Year Treasury Bond ETF | iShares Russell Mid-Cap Value ETF |
| Category | Long Government | Mid-Cap Value |
| Issuer | iShares | iShares |
| AUM | 15.15B | 14.24B |
| Avg. Return | 9.00% | 12.35% |
| Div. Yield | 1.5% | 1.34% |
| Expense Ratio | 0.15% | 0.23% |
The iShares 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.
The iShares Russell Mid-Cap Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.
TLT’s dividend yield is 0.16% higher than that of IWS (1.5% vs. 1.34%). Also, TLT yielded on average 3.35% less per year over the past decade (9.00% vs. 12.35%). The expense ratio of TLT is 0.08 percentage points lower than IWS’s (0.15% vs. 0.23%).
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Fund Composition
Holdings
| TLT Bond Sectors | Weight |
| AAA | 100.0% |
| Others | 0.0% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
TLT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 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.
| IWS Holdings | Weight |
| Twitter Inc | 0.69% |
| Marvell Technology Inc | 0.69% |
| IHS Markit Ltd | 0.62% |
| Prudential Financial Inc | 0.56% |
| Otis Worldwide Corp Ordinary Shares | 0.54% |
| International Flavors & Fragrances Inc | 0.53% |
| Xcel Energy Inc | 0.52% |
| Motorola Solutions Inc | 0.52% |
| Aptiv PLC | 0.52% |
| Aflac Inc | 0.52% |
IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.
International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.
Risk Analysis
| TLT | IWS | |
| Mean Return | 0.63 | 1.06 |
| R-squared | 68.76 | 87.04 |
| Std. Deviation | 12.76 | 16.03 |
| Alpha | -2.83 | -4.11 |
| Beta | 3.54 | 1.1 |
| Sharpe Ratio | 0.55 | 0.75 |
| Treynor Ratio | 1.82 | 10.3 |
The iShares 20+ Year Treasury Bond ETF (TLT) has a R-squared of 68.76 with a Treynor Ratio of 1.82 and a Sharpe Ratio of 0.55. Its Beta is 3.54 while TLT’s Mean Return is 0.63. Furthermore, the fund has a Standard Deviation of 12.76 and a Alpha of -2.83.
The iShares Russell Mid-Cap Value ETF (IWS) has a Mean Return of 1.06 with a Alpha of -4.11 and a Treynor Ratio of 10.3. Its R-squared is 87.04 while IWS’s Beta is 1.1. Furthermore, the fund has a Sharpe Ratio of 0.75 and a Standard Deviation of 16.03.
TLT’s Mean Return is 0.43 points lower than that of IWS and its R-squared is 18.28 points lower. With a Standard Deviation of 12.76, TLT is slightly less volatile than IWS. The Alpha and Beta of TLT are 1.28 points higher and 2.44 points higher than IWS’s Alpha and Beta.
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Performance
Annual Returns
| Year | TLT | IWS |
| 2020 | 17.92% | 4.76% |
| 2019 | 14.93% | 26.78% |
| 2018 | -2.07% | -12.36% |
| 2017 | 8.92% | 13.1% |
| 2016 | 1.36% | 19.69% |
| 2015 | -1.65% | -4.93% |
| 2014 | 27.35% | 14.49% |
| 2013 | -13.91% | 33.11% |
| 2012 | 3.25% | 18.27% |
| 2011 | 33.6% | -1.55% |
| 2010 | 9.25% | 24.46% |
TLT had its best year in 2011 with an annual return of 33.6%. TLT’s worst year over the past decade yielded -13.91% and occurred in 2013. In most years the iShares 20+ Year Treasury Bond ETF provided moderate returns such as in 2012, 2017, and 2010 where annual returns amounted to 3.25%, 8.92%, and 9.25% respectively.
The year 2013 was the strongest year for IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| TLT | $10,000 | $23,809 | 9.00% |
| IWS | $10,000 | $33,083 | 12.35% |
A $10,000 investment in TLT would have resulted in a final balance of $23,809. This is a profit of $13,809 over 11 years and amounts to a compound annual growth rate (CAGR) of 9.00%.
With a $10,000 investment in IWS, the end total would have been $33,083. This equates to a $23,083 profit over 11 years and a compound annual growth rate (CAGR) of 12.35%.
TLT’s CAGR is 3.35 percentage points lower than that of IWS and as a result, would have yielded $9,274 less on a $10,000 investment. Thus, TLT performed worse than IWS by 3.35% annually.
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