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DIA vs. MBB: What’s The Difference?

The SPDR Dow Jones Industrial Average ETF Trust (DIA) and the iShares MBS ETF (MBB) are both among the Top 100 ETFs. DIA is a SPDR State Street Global Advisors Large Value fund and MBB is a iShares Intermediate Government fund. So, what’s the difference between DIA and MBB? And which fund is better?

The expense ratio of DIA is 0.10 percentage points higher than MBB’s (0.16% vs. 0.06%). DIA also has a high exposure to the financial services sector while MBB is mostly comprised of AAA bonds. Overall, DIA has provided higher returns than MBB over the past 11 years.

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

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Summary

DIAMBB
NameSPDR Dow Jones Industrial Average ETF TrustiShares MBS ETF
CategoryLarge ValueIntermediate Government
IssuerSPDR State Street Global AdvisorsiShares
AUM30.46B25.69B
Avg. Return13.35%3.08%
Div. Yield1.61%1.88%
Expense Ratio0.16%0.06%

The SPDR Dow Jones Industrial Average ETF Trust (DIA) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 30.46B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.61% with an expense ratio of 0.16%.

The iShares MBS ETF (MBB) is a Intermediate Government fund that is issued by iShares. It currently has 25.69B total assets under management and has yielded an average annual return of 3.08% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.06%.

DIA’s dividend yield is 0.27% lower than that of MBB (1.61% vs. 1.88%). Also, DIA yielded on average 10.28% more per year over the past decade (13.35% vs. 3.08%). The expense ratio of DIA is 0.10 percentage points higher than MBB’s (0.16% vs. 0.06%).

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Fund Composition

Holdings

DIA - Holdings

DIA HoldingsWeight
UnitedHealth Group Inc7.63%
Goldman Sachs Group Inc7.23%
The Home Depot Inc6.07%
Microsoft Corp5.16%
Salesforce.com Inc4.65%
Amgen Inc4.64%
Boeing Co4.56%
Visa Inc Class A4.45%
McDonald’s Corp4.4%
Honeywell International Inc4.18%

DIA’s Top Holdings are UnitedHealth Group Inc, Goldman Sachs Group Inc, The Home Depot Inc, Microsoft Corp, and Salesforce.com Inc at 7.63%, 7.23%, 6.07%, 5.16%, and 4.65%.

Amgen Inc (4.64%), Boeing Co (4.56%), and Visa Inc Class A (4.45%) have a slightly smaller but still significant weight. McDonald’s Corp and Honeywell International Inc are also represented in the DIA’s holdings at 4.4% and 4.18%.

MBB - Holdings

MBB Bond SectorsWeight
AAA99.51%
Others0.49%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

MBB’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.51%, 0.49%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.

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Risk Analysis

DIAMBB
Mean Return1.130.2
R-squared93.3174.38
Std. Deviation13.682.12
Alpha-0.940.14
Beta0.970.6
Sharpe Ratio0.940.87
Treynor Ratio13.073.02

The SPDR Dow Jones Industrial Average ETF Trust (DIA) has a Treynor Ratio of 13.07 with a Alpha of -0.94 and a R-squared of 93.31. Its Sharpe Ratio is 0.94 while DIA’s Standard Deviation is 13.68. Furthermore, the fund has a Mean Return of 1.13 and a Beta of 0.97.

The iShares MBS ETF (MBB) has a Sharpe Ratio of 0.87 with a Standard Deviation of 2.12 and a R-squared of 74.38. Its Treynor Ratio is 3.02 while MBB’s Beta is 0.6. Furthermore, the fund has a Alpha of 0.14 and a Mean Return of 0.2.

DIA’s Mean Return is 0.93 points higher than that of MBB and its R-squared is 18.93 points higher. With a Standard Deviation of 13.68, DIA is slightly more volatile than MBB. The Alpha and Beta of DIA are 1.08 points lower and 0.37 points higher than MBB’s Alpha and Beta.

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Performance

Annual Returns

DIA vs. MBB - Annual Returns

YearDIAMBB
20209.63%4.03%
201925.09%6.27%
2018-3.6%0.81%
201727.97%2.37%
201616.28%1.28%
20150.1%1.28%
20149.88%6.16%
201329.41%-1.92%
201210.04%2.23%
20118.21%5.88%
201013.87%5.44%

DIA had its best year in 2013 with an annual return of 29.41%. DIA’s worst year over the past decade yielded -3.6% and occurred in 2018. In most years the SPDR Dow Jones Industrial Average ETF Trust provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 9.88%, 10.04%, and 13.87% respectively.

The year 2019 was the strongest year for MBB, returning 6.27% on an annual basis. The poorest year for MBB in the last ten years was 2013, with a yield of -1.92%. Most years the iShares MBS ETF has given investors modest returns, such as in 2012, 2017, and 2020, when gains were 2.23%, 2.37%, and 4.03% respectively.

Portfolio Growth

DIA vs. MBB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
DIA$10,000$37,96513.35%
MBB$10,000$13,9063.08%

A $10,000 investment in DIA would have resulted in a final balance of $37,965. This is a profit of $27,965 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.35%.

With a $10,000 investment in MBB, the end total would have been $13,906. This equates to a $3,906 profit over 11 years and a compound annual growth rate (CAGR) of 3.08%.

DIA’s CAGR is 10.28 percentage points higher than that of MBB and as a result, would have yielded $24,059 more on a $10,000 investment. Thus, DIA outperformed MBB by 10.28% annually.


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