5-Year Backtest: Buy and Hold IWM (iShares Russell 2000 ETF)

This analysis evaluates a buy-and-hold strategy over the past 5 years, providing a historical perspective on IWM's performance from 2020-07-06 to 2025-07-03.

Note: This simulation uses adjusted close prices, meaning all historical prices have been retroactively adjusted for splits and dividends. To achieve similar results in practice, you would need to reinvest all dividends automatically as they are paid.

Performance Overview

Starting with an initial capital of $10,000.00, we purchased shares of IWM on 2020-07-06, at a price of $134.78 per share (adjusted for splits and dividends). No trading, no adjustments — just a simple buy-and-hold approach.

We held the position continuously through every market twist and turn, never selling. As of 2025-07-03, the price of IWM had risen to $223.08. While we didn't sell, we can still assess the performance by calculating the current value of the investment: $16,551.43 — a total gain of 65.51%.

This translates into an annualized return of 10.62% over the entire period. This return is closely aligned with the typical long-term growth rates of diversified equity investments — a realistic and respectable outcome for a passive strategy.

Drawdown and Risk

The maximum drawdown recorded during this period was 31.91%. This drawdown began after a peak price of $230.99 on 2021-11-08, and reached its lowest point on 2022-06-16 when the price fell to $157.28. The drawdown lasted for 220 days.

The drawdown was moderate and aligns with the type of volatility observed in many broad market assets over extended periods. The maximum drawdown lasted over six months, suggesting a sustained downturn or persistent volatility. These periods can shake investor confidence and demand discipline.

The Calmar Ratio — annualized return divided by maximum drawdown — was 0.33, reflecting the tradeoff between return and volatility.

A moderate return-to-risk profile. The strategy handled risk reasonably well while delivering decent returns.