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ACWI vs. MTUM: What’s The Difference?

The iShares MSCI ACWI ETF (ACWI) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. ACWI is a iShares N/A fund and MTUM is a iShares Large Growth fund. So, what’s the difference between ACWI and MTUM? And which fund is better?

The expense ratio of ACWI is 0.17 percentage points higher than MTUM’s (0.32% vs. 0.15%). ACWI also has a higher exposure to the technology sector and a higher standard deviation. Overall, ACWI has provided lower returns than MTUM over the past 7 years.

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

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Summary

ACWIMTUM
NameiShares MSCI ACWI ETFiShares MSCI USA Momentum Factor ETF
CategoryN/ALarge Growth
IssueriSharesiShares
AUM16.85B14.53B
Avg. Return10.21%17.37%
Div. Yield1.39%0.44%
Expense Ratio0.32%0.15%

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

The iShares MSCI USA Momentum Factor ETF (MTUM) is a Large Growth fund that is issued by iShares. It currently has 14.53B total assets under management and has yielded an average annual return of 17.37% over the past 10 years. The fund has a dividend yield of 0.44% with an expense ratio of 0.15%.

ACWI’s dividend yield is 0.95% higher than that of MTUM (1.39% vs. 0.44%). Also, ACWI yielded on average 7.15% less per year over the past decade (10.21% vs. 17.37%). The expense ratio of ACWI is 0.17 percentage points higher than MTUM’s (0.32% vs. 0.15%).

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Fund Composition

Industry Exposure

ACWI vs. MTUM - Industry Exposure

ACWIMTUM
Technology20.41%15.24%
Industrials9.65%12.47%
Energy3.48%1.77%
Communication Services9.87%13.18%
Utilities2.61%0.19%
Healthcare11.74%6.41%
Consumer Defensive7.15%2.88%
Real Estate2.75%0.43%
Financial Services15.58%34.32%
Consumer Cyclical12.01%9.96%
Basic Materials4.73%3.15%

The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.

ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.

The iShares MSCI USA Momentum Factor ETF (MTUM) has the most exposure to the Financial Services sector at 34.32%. This is followed by Technology and Communication Services at 15.24% and 13.18% respectively. Real Estate (0.43%), Energy (1.77%), and Consumer Defensive (2.88%) only make up 5.08% of the fund’s total assets.

MTUM’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Consumer Cyclical, Industrials, and Communication Services stocks at 3.15%, 6.41%, 9.96%, 12.47%, and 13.18%.

ACWI is 5.17% more exposed to the Technology sector than MTUM (20.41% vs 15.24%). ACWI’s exposure to Financial Services and Consumer Cyclical stocks is 18.74% lower and 2.05% higher respectively (15.58% vs. 34.32% and 12.01% vs. 9.96%). In total, Real Estate, Energy, and Basic Materials also make up 5.61% more of the fund’s holdings compared to MTUM (10.96% vs. 5.35%).

Holdings

ACWI - Holdings

ACWI HoldingsWeight
Apple Inc3.44%
Microsoft Corp2.91%
Amazon.com Inc2.21%
Facebook Inc A1.25%
Alphabet Inc Class C1.12%
Alphabet Inc A1.09%
Taiwan Semiconductor Manufacturing Co Ltd0.79%
Tesla Inc0.78%
NVIDIA Corp0.74%
JPMorgan Chase & Co0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

MTUM - Holdings

MTUM HoldingsWeight
Tesla Inc5.63%
The Walt Disney Co4.39%
JPMorgan Chase & Co4.35%
Berkshire Hathaway Inc Class B4.34%
Bank of America Corp3.81%
PayPal Holdings Inc3.76%
Wells Fargo & Co3.05%
Applied Materials Inc3.05%
Moderna Inc2.89%
Alphabet Inc Class C2.84%

MTUM’s Top Holdings are Tesla Inc, The Walt Disney Co, JPMorgan Chase & Co, Berkshire Hathaway Inc Class B, and Bank of America Corp at 5.63%, 4.39%, 4.35%, 4.34%, and 3.81%.

PayPal Holdings Inc (3.76%), Wells Fargo & Co (3.05%), and Applied Materials Inc (3.05%) have a slightly smaller but still significant weight. Moderna Inc and Alphabet Inc Class C are also represented in the MTUM’s holdings at 2.89% and 2.84%.

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Risk Analysis

ACWIMTUM
Mean Return0.890
R-squared99.960
Std. Deviation14.050
Alpha0.150
Beta10
Sharpe Ratio0.710
Treynor Ratio9.450

The iShares MSCI ACWI ETF (ACWI) has a Sharpe Ratio of 0.71 with a R-squared of 99.96 and a Treynor Ratio of 9.45. Its Mean Return is 0.89 while ACWI’s Alpha is 0.15. Furthermore, the fund has a Beta of 1 and a Standard Deviation of 14.05.

The iShares MSCI USA Momentum Factor ETF (MTUM) has a Treynor Ratio of 0 with a Beta of 0 and a Mean Return of 0. Its R-squared is 0 while MTUM’s Alpha is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Standard Deviation of 0.

ACWI’s Mean Return is 0.89 points higher than that of MTUM and its R-squared is 99.96 points higher. With a Standard Deviation of 14.05, ACWI is slightly more volatile than MTUM. The Alpha and Beta of ACWI are 0.15 points higher and 1.00 points higher than MTUM’s Alpha and Beta.

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Performance

Annual Returns

ACWI vs. MTUM - Annual Returns

YearACWIMTUM
202016.38%29.69%
201926.7%27.57%
2018-9.15%-1.77%
201724.35%37.6%
20168.22%4.89%
2015-2.39%9.12%
20144.64%14.48%
201322.91%0.0%
201215.99%0.0%
2011-7.6%0.0%
201012.31%0.0%

ACWI had its best year in 2019 with an annual return of 26.7%. ACWI’s worst year over the past decade yielded -9.15% and occurred in 2018. In most years the iShares MSCI ACWI ETF provided moderate returns such as in 2016, 2010, and 2012 where annual returns amounted to 8.22%, 12.31%, and 15.99% respectively.

The year 2017 was the strongest year for MTUM, returning 37.6% on an annual basis. The poorest year for MTUM in the last ten years was 2018, with a yield of -1.77%. Most years the iShares MSCI USA Momentum Factor ETF has given investors modest returns, such as in 2010, 2016, and 2015, when gains were 0.0%, 4.89%, and 9.12% respectively.

Portfolio Growth

ACWI vs. MTUM - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
ACWI$10,000$18,41310.21%
MTUM$10,000$29,30117.37%

A $10,000 investment in ACWI would have resulted in a final balance of $18,413. This is a profit of $8,413 over 7 years and amounts to a compound annual growth rate (CAGR) of 10.21%.

With a $10,000 investment in MTUM, the end total would have been $29,301. This equates to a $19,301 profit over 7 years and a compound annual growth rate (CAGR) of 17.37%.

ACWI’s CAGR is 7.15 percentage points lower than that of MTUM and as a result, would have yielded $10,888 less on a $10,000 investment. Thus, ACWI performed worse than MTUM by 7.15% annually.


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