The iShares Gold Trust (IAU) and the iShares MSCI USA Min Vol Factor ETF (USMV) are both among the Top 100 ETFs. IAU is a iShares N/A fund and USMV is a iShares Large Blend fund. So, what’s the difference between IAU and USMV? And which fund is better?
The expense ratio of IAU is 0.10 percentage points higher than USMV’s (0.25% vs. 0.15%). IAU also has a lower exposure to the technology sector and a higher standard deviation. Overall, IAU has provided lower returns than USMV over the past 8 years.
In this article, we’ll compare IAU vs. USMV. We’ll look at performance and annual returns, as well as at their risk metrics and industry exposure. Moreover, I’ll also discuss IAU’s and USMV’s fund composition, holdings, and portfolio growth and examine how these affect their overall returns.
|Name||iShares Gold Trust||iShares MSCI USA Min Vol Factor ETF|
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 MSCI USA Min Vol Factor ETF (USMV) is a Large Blend fund that is issued by iShares. It currently has 27.6B total assets under management and has yielded an average annual return of 13.89% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.
IAU’s dividend yield is 1.50% lower than that of USMV (0.0% vs. 1.5%). Also, IAU yielded on average 7.86% less per year over the past decade (6.03% vs. 13.89%). The expense ratio of IAU is 0.10 percentage points higher than USMV’s (0.25% vs. 0.15%).
The iShares Gold Trust (IAU) has the most exposure to the Technology sector at 0.0%. This is followed by Industrials and Energy at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.
IAU’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Energy stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
The iShares MSCI USA Min Vol Factor ETF (USMV) has the most exposure to the Technology sector at 20.53%. This is followed by Healthcare and Consumer Defensive at 18.42% and 12.82% respectively. Basic Materials (1.65%), Real Estate (2.73%), and Consumer Cyclical (5.53%) only make up 9.91% of the fund’s total assets.
USMV’s mid-section with moderate exposure is comprised of Utilities, Financial Services, Industrials, Communication Services, and Consumer Defensive stocks at 6.93%, 9.65%, 10.51%, 11.03%, and 12.82%.
IAU is 20.53% less exposed to the Technology sector than USMV (0.0% vs 20.53%). IAU’s exposure to Industrials and Energy stocks is 10.51% lower and 0.21% lower respectively (0.0% vs. 10.51% and 0.0% vs. 0.21%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 17.91% less of the fund’s holdings compared to USMV (0.00% vs. 17.91%).
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%.
|Eli Lilly and Co||1.64%|
|T-Mobile US Inc||1.51%|
|Accenture PLC Class A||1.51%|
|Visa Inc Class A||1.49%|
|Waste Management Inc||1.45%|
|The Kroger Co||1.44%|
|Johnson & Johnson||1.42%|
|Gilead Sciences Inc||1.42%|
USMV’s Top Holdings are Eli Lilly and Co, Microsoft Corp, T-Mobile US Inc, Accenture PLC Class A, and Visa Inc Class A at 1.64%, 1.62%, 1.51%, 1.51%, and 1.49%.
Waste Management Inc (1.45%), Adobe Inc (1.45%), and The Kroger Co (1.44%) have a slightly smaller but still significant weight. Johnson & Johnson and Gilead Sciences Inc are also represented in the USMV’s holdings at 1.42% and 1.42%.
The iShares Gold Trust (IAU) has a Treynor Ratio of 1.5 with a Beta of 0.48 and a Sharpe Ratio of 0.13. Its Mean Return is 0.23 while IAU’s Alpha is 4.16. Furthermore, the fund has a Standard Deviation of 16.97 and a R-squared of 16.03.
The iShares MSCI USA Min Vol Factor ETF (USMV) has a Alpha of 0 with a Beta of 0 and a Standard Deviation of 0. Its R-squared is 0 while USMV’s Treynor Ratio is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Mean Return of 0.
IAU’s Mean Return is 0.23 points higher than that of USMV and its R-squared is 16.03 points higher. With a Standard Deviation of 16.97, IAU is slightly more volatile than USMV. The Alpha and Beta of IAU are 4.16 points higher and 0.48 points higher than USMV’s Alpha and Beta.
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 USMV, returning 27.77% on an annual basis. The poorest year for USMV in the last ten years was 2011, with a yield of 0.0%. Most years the iShares MSCI USA Min Vol Factor ETF has given investors modest returns, such as in 2020, 2016, and 2012, when gains were 5.6%, 10.5%, and 11.04% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IAU would have resulted in a final balance of $11,142. This is a profit of $1,142 over 8 years and amounts to a compound annual growth rate (CAGR) of 6.03%.
With a $10,000 investment in USMV, the end total would have been $27,607. This equates to a $17,607 profit over 8 years and a compound annual growth rate (CAGR) of 13.89%.
IAU’s CAGR is 7.86 percentage points lower than that of USMV and as a result, would have yielded $16,465 less on a $10,000 investment. Thus, IAU performed worse than USMV by 7.86% annually.
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