FAAR vs IGBH
First Trust Alternative Absolute Return Strategy ETF vs iShares Interest Rate Hedged Long-Term Corporate Bond ETF
Quick Verdict
IGBH has a lower expense ratio. FAAR delivered stronger 1-year returns. IGBH offers more diversification with 76 holdings.
Side-by-Side Comparison
| Metric | FAAR | IGBH | Winner |
|---|---|---|---|
| Expense Ratio | 0.97% | 0.14% | |
| AUM | $191M | $203M | |
| Dividend Yield | 9.19% | 5.68% | |
| Holdings | 6 | 4,130 | |
| YTD Return | +13.94% | +1.43% | |
| 1Y Return | +19.26% | +5.80% | |
| 3Y Return (annualized) | +8.78% | +7.55% | |
| 5Y Return (annualized) | +7.33% | +5.34% | |
| Volatility (annualized) | 9.2% | 7.5% | |
| Max Drawdown | -18.8% | -38.9% | |
| Fund Family | First Trust Portfolios (US) | iShares by BlackRock (US) | |
| Category | Commodity | Fixed Income | |
| Inception | May 18, 2016 | Jul 22, 2015 |
FAAR vs IGBH Performance
First Trust Alternative Absolute Return Strategy ETF (FAAR) is a ETF from First Trust Portfolios (US) and iShares Interest Rate Hedged Long-Term Corporate Bond ETF (IGBH) is a ETF from iShares by BlackRock (US). Over the past year FAAR returned +19.26% while IGBH returned +5.80%. Year to date, FAAR is up 13.94% versus a gain of 1.43% for IGBH.
Over three years, FAAR compounded at +8.78% per year against +7.55% for IGBH; over five years the annualized figures are +7.33% and +5.34% respectively. Across the full 10-year window we track, FAAR has the edge at +3.32% annualized vs +2.85%. 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 7.5% for IGBH. 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 -38.9% for IGBH. 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 0.10. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
FAAR charges 0.97% per year while IGBH charges 0.14%. On a $10,000 position that is $97 vs $14 annually, a gap of $83 per year that compounds over a long holding period. On income, FAAR currently yields 9.19% against 5.68% for IGBH.
Holdings Overlap
FAAR and IGBH share 0 holdings out of 77 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 IGBH?
FAAR has an expense ratio of 0.97% while IGBH charges 0.14%. IGBH is the cheaper option. On a $10,000 investment, that is $83 per year of difference.
Which performed better, FAAR or IGBH?
Over the past year FAAR returned +19.26% vs +5.80% for IGBH, so FAAR leads on 1-year performance. Over the longest common window we track (10 years), FAAR annualized +3.32% vs +2.85% for IGBH. Past performance does not guarantee future results.
Which is riskier, FAAR or IGBH?
FAAR has been the more volatile fund at 9.2% annualized versus 7.5% for IGBH. Worst drawdown: FAAR -18.8% vs IGBH -38.9%.
Should I hold both FAAR and IGBH?
FAAR and IGBH have a monthly-return correlation of 0.10, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between FAAR and IGBH?
FAAR and IGBH share 0 common holdings with a 0.0% weight overlap. Combined, they hold 77 unique securities.
Which pays a higher dividend, FAAR or IGBH?
FAAR yields 9.19% while IGBH yields 5.68%, so FAAR currently pays the higher dividend yield.
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