FAAR vs IG
FAAR vs IG
First Trust Alternative Absolute Return Strategy ETF vs Principal Investment Grade Corporate ETF
Quick Verdict
IG has a lower expense ratio. FAAR delivered stronger 1-year returns. IG offers more diversification with 145 holdings.
Side-by-Side Comparison
| Metric | FAAR | IG | Winner |
|---|---|---|---|
| Expense Ratio | 0.97% | 0.19% | |
| AUM | $191M | $198M | |
| Dividend Yield | 9.19% | 5.07% | |
| Holdings | 6 | 248 | |
| YTD Return | +13.94% | -1.54% | |
| 1Y Return | +19.26% | +0.84% | |
| 3Y Return (annualized) | +8.78% | +4.56% | |
| 5Y Return (annualized) | +7.33% | -0.69% | |
| Volatility (annualized) | 9.2% | 8.0% | |
| Max Drawdown | -18.8% | -23.8% | |
| Fund Family | First Trust Portfolios (US) | Principal Funds | |
| Category | Commodity | Fixed Income | |
| Inception | May 18, 2016 | Apr 18, 2018 |
FAAR vs IG Performance
First Trust Alternative Absolute Return Strategy ETF (FAAR) is a ETF from First Trust Portfolios (US) and Principal Investment Grade Corporate ETF (IG) is a ETF from Principal Funds. Over the past year FAAR returned +19.26% while IG returned +0.84%. Year to date, FAAR is up 13.94% versus a loss of 1.54% for IG.
Over three years, FAAR compounded at +8.78% per year against +4.56% for IG; over five years the annualized figures are +7.33% and -0.69% respectively. Across the full 8-year window we track, FAAR has the edge at +3.32% annualized vs +0.59%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
FAAR has been the more volatile fund, with annualized monthly volatility of 9.2% compared with 8.0% for IG. Lower volatility generally means a smoother ride, though it often comes with lower long-run returns.
The deepest peak-to-trough decline in our data was -18.8% for FAAR and -23.8% for IG. Drawdown depth is worth weighing if you expect to sell during market stress rather than ride it out.
The two funds' monthly returns correlate at -0.05. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
FAAR charges 0.97% per year while IG charges 0.19%. On a $10,000 position that is $97 vs $19 annually, a gap of $78 per year that compounds over a long holding period. On income, FAAR currently yields 9.19% against 5.07% for IG.
Holdings Overlap
FAAR and IG share 0 holdings out of 146 unique holdings combined, representing a 0.0% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, FAAR or IG?
FAAR has an expense ratio of 0.97% while IG charges 0.19%. IG is the cheaper option. On a $10,000 investment, that is $78 per year of difference.
Which performed better, FAAR or IG?
Over the past year FAAR returned +19.26% vs +0.84% for IG, so FAAR leads on 1-year performance. Over the longest common window we track (8 years), FAAR annualized +3.32% vs +0.59% for IG. Past performance does not guarantee future results.
Which is riskier, FAAR or IG?
FAAR has been the more volatile fund at 9.2% annualized versus 8.0% for IG. Worst drawdown: FAAR -18.8% vs IG -23.8%.
Should I hold both FAAR and IG?
FAAR and IG have a monthly-return correlation of -0.05, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between FAAR and IG?
FAAR and IG share 0 common holdings with a 0.0% weight overlap. Combined, they hold 146 unique securities.
Which pays a higher dividend, FAAR or IG?
FAAR yields 9.19% while IG yields 5.07%, so FAAR currently pays the higher dividend yield.
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