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.

Summary

ACWI MTUM
Name iShares MSCI ACWI ETF iShares MSCI USA Momentum Factor ETF
Category N/A Large Growth
Issuer iShares iShares
AUM 16.85B 14.53B
Avg. Return 10.21% 17.37%
Div. Yield 1.39% 0.44%
Expense Ratio 0.32% 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%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

ACWI vs. MTUM - Industry Exposure

ACWI MTUM
Technology 20.41% 15.24%
Industrials 9.65% 12.47%
Energy 3.48% 1.77%
Communication Services 9.87% 13.18%
Utilities 2.61% 0.19%
Healthcare 11.74% 6.41%
Consumer Defensive 7.15% 2.88%
Real Estate 2.75% 0.43%
Financial Services 15.58% 34.32%
Consumer Cyclical 12.01% 9.96%
Basic Materials 4.73% 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 Holdings Weight
Apple Inc 3.44%
Microsoft Corp 2.91%
Amazon.com Inc 2.21%
Facebook Inc A 1.25%
Alphabet Inc Class C 1.12%
Alphabet Inc A 1.09%
Taiwan Semiconductor Manufacturing Co Ltd 0.79%
Tesla Inc 0.78%
NVIDIA Corp 0.74%
JPMorgan Chase & Co 0.71%

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 Holdings Weight
Tesla Inc 5.63%
The Walt Disney Co 4.39%
JPMorgan Chase & Co 4.35%
Berkshire Hathaway Inc Class B 4.34%
Bank of America Corp 3.81%
PayPal Holdings Inc 3.76%
Wells Fargo & Co 3.05%
Applied Materials Inc 3.05%
Moderna Inc 2.89%
Alphabet Inc Class C 2.84%

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%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

ACWI MTUM
Mean Return 0.89 0
R-squared 99.96 0
Std. Deviation 14.05 0
Alpha 0.15 0
Beta 1 0
Sharpe Ratio 0.71 0
Treynor Ratio 9.45 0

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.

BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Coinbase - the simplest and cheapest broker I've found! Click here to read more (link to Coinbase).

Performance

Annual Returns

ACWI vs. MTUM - Annual Returns

Year ACWI MTUM
2020 16.38% 29.69%
2019 26.7% 27.57%
2018 -9.15% -1.77%
2017 24.35% 37.6%
2016 8.22% 4.89%
2015 -2.39% 9.12%
2014 4.64% 14.48%
2013 22.91% 0.0%
2012 15.99% 0.0%
2011 -7.6% 0.0%
2010 12.31% 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

Fund Initial Balance Final Balance CAGR
ACWI $10,000 $18,413 10.21%
MTUM $10,000 $29,301 17.37%

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.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Coinbase. I've started allocating a small amount of assets to the growing crypto space and Coinbase has just been a breeze to use. Once you register, make sure to also open an Coinbase Pro account to buy crypto at the lowest fees on the market (just 0.1%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply