The iShares Gold Trust (IAU) and the iShares MBS ETF (MBB) are both among the Top 100 ETFs. IAU is a iShares N/A fund and MBB is a iShares Intermediate Government fund. So, what’s the difference between IAU and MBB? And which fund is better?
The expense ratio of IAU is 0.19 percentage points higher than MBB’s (0.25% vs. 0.06%). IAU also has a high exposure to the technology sector while MBB is mostly comprised of AAA bonds. Overall, IAU has provided higher returns than MBB over the past 11 years.
In this article, we’ll compare IAU vs. MBB. We’ll look at industry exposure and annual returns, as well as at their holdings and performance. Moreover, I’ll also discuss IAU’s and MBB’s portfolio growth, risk metrics, and fund composition and examine how these affect their overall returns.
Summary
| IAU | MBB | |
| Name | iShares Gold Trust | iShares MBS ETF |
| Category | N/A | Intermediate Government |
| Issuer | iShares | iShares |
| AUM | 28.61B | 25.69B |
| Avg. Return | 6.03% | 3.08% |
| Div. Yield | 0.0% | 1.88% |
| Expense Ratio | 0.25% | 0.06% |
The iShares Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.
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%.
IAU’s dividend yield is 1.88% lower than that of MBB (0.0% vs. 1.88%). Also, IAU yielded on average 2.96% more per year over the past decade (6.03% vs. 3.08%). The expense ratio of IAU is 0.19 percentage points higher than MBB’s (0.25% vs. 0.06%).
Fund Composition
Holdings
| IAU Holdings | Weight |
| Gold | 100.0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.
N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.
| MBB Bond Sectors | Weight |
| AAA | 99.51% |
| Others | 0.49% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
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.
Risk Analysis
| IAU | MBB | |
| Mean Return | 0.23 | 0.2 |
| R-squared | 16.03 | 74.38 |
| Std. Deviation | 16.97 | 2.12 |
| Alpha | 4.16 | 0.14 |
| Beta | 0.48 | 0.6 |
| Sharpe Ratio | 0.13 | 0.87 |
| Treynor Ratio | 1.5 | 3.02 |
The iShares Gold Trust (IAU) has a Alpha of 4.16 with a R-squared of 16.03 and a Treynor Ratio of 1.5. Its Mean Return is 0.23 while IAU’s Sharpe Ratio is 0.13. Furthermore, the fund has a Beta of 0.48 and a Standard Deviation of 16.97.
The iShares MBS ETF (MBB) has a R-squared of 74.38 with a Beta of 0.6 and a Treynor Ratio of 3.02. Its Sharpe Ratio is 0.87 while MBB’s Alpha is 0.14. Furthermore, the fund has a Mean Return of 0.2 and a Standard Deviation of 2.12.
IAU’s Mean Return is 0.03 points higher than that of MBB and its R-squared is 58.35 points lower. With a Standard Deviation of 16.97, IAU is slightly more volatile than MBB. The Alpha and Beta of IAU are 4.02 points higher and 0.12 points lower than MBB’s Alpha and Beta.
Performance
Annual Returns
| Year | IAU | MBB |
| 2020 | 23.86% | 4.03% |
| 2019 | 18.54% | 6.27% |
| 2018 | -1.39% | 0.81% |
| 2017 | 11.58% | 2.37% |
| 2016 | 8.85% | 1.28% |
| 2015 | -11.65% | 1.28% |
| 2014 | -0.44% | 6.16% |
| 2013 | -27.96% | -1.92% |
| 2012 | 8.37% | 2.23% |
| 2011 | 8.66% | 5.88% |
| 2010 | 27.93% | 5.44% |
IAU had its best year in 2010 with an annual return of 27.93%. IAU’s worst year over the past decade yielded -27.96% and occurred in 2013. In most years the iShares Gold Trust provided moderate returns such as in 2012, 2011, and 2016 where annual returns amounted to 8.37%, 8.66%, and 8.85% 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
| Fund | Initial Balance | Final Balance | CAGR |
| IAU | $10,000 | $16,786 | 6.03% |
| MBB | $10,000 | $13,906 | 3.08% |
A $10,000 investment in IAU would have resulted in a final balance of $16,786. This is a profit of $6,786 over 11 years and amounts to a compound annual growth rate (CAGR) of 6.03%.
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%.
IAU’s CAGR is 2.96 percentage points higher than that of MBB and as a result, would have yielded $2,880 more on a $10,000 investment. Thus, IAU outperformed MBB by 2.96% annually.
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