IEFA vs. MTUM: What’s The Difference?

The iShares Core MSCI EAFE ETF (IEFA) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. IEFA is a iShares Foreign Large Blend fund and MTUM is a iShares Large Growth fund. So, what’s the difference between IEFA and MTUM? And which fund is better?

The expense ratio of IEFA is 0.08 percentage points lower than MTUM’s (0.07% vs. 0.15%). IEFA also has a higher exposure to the industrials sector and a lower standard deviation. Overall, IEFA has provided lower returns than MTUM over the past ten years.

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

Summary

IEFA MTUM
Name iShares Core MSCI EAFE ETF iShares MSCI USA Momentum Factor ETF
Category Foreign Large Blend Large Growth
Issuer iShares iShares
AUM 95.78B 14.53B
Avg. Return 5.79% 17.37%
Div. Yield 2.28% 0.44%
Expense Ratio 0.07% 0.15%

The iShares Core MSCI EAFE ETF (IEFA) is a Foreign Large Blend fund that is issued by iShares. It currently has 95.78B total assets under management and has yielded an average annual return of 5.79% over the past 10 years. The fund has a dividend yield of 2.28% with an expense ratio of 0.07%.

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%.

IEFA’s dividend yield is 1.84% higher than that of MTUM (2.28% vs. 0.44%). Also, IEFA yielded on average 11.58% less per year over the past decade (5.79% vs. 17.37%). The expense ratio of IEFA is 0.08 percentage points lower than MTUM’s (0.07% vs. 0.15%).

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Fund Composition

Industry Exposure

IEFA vs. MTUM - Industry Exposure

IEFA MTUM
Technology 9.81% 15.24%
Industrials 16.32% 12.47%
Energy 3.19% 1.77%
Communication Services 5.53% 13.18%
Utilities 3.25% 0.19%
Healthcare 12.01% 6.41%
Consumer Defensive 9.78% 2.88%
Real Estate 4.31% 0.43%
Financial Services 15.91% 34.32%
Consumer Cyclical 11.96% 9.96%
Basic Materials 7.93% 3.15%

The iShares Core MSCI EAFE ETF (IEFA) has the most exposure to the Industrials sector at 16.32%. This is followed by Financial Services and Healthcare at 15.91% and 12.01% respectively. Utilities (3.25%), Real Estate (4.31%), and Communication Services (5.53%) only make up 13.09% of the fund’s total assets.

IEFA’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Technology, Consumer Cyclical, and Healthcare stocks at 7.93%, 9.78%, 9.81%, 11.96%, 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%.

IEFA is 3.85% more exposed to the Industrials sector than MTUM (16.32% vs 12.47%). IEFA’s exposure to Financial Services and Healthcare stocks is 18.41% lower and 5.60% higher respectively (15.91% vs. 34.32% and 12.01% vs. 6.41%). In total, Utilities, Real Estate, and Communication Services also make up 0.71% less of the fund’s holdings compared to MTUM (13.09% vs. 13.80%).

Holdings

IEFA - Holdings

IEFA Holdings Weight
Nestle SA 1.77%
ASML Holding NV 1.43%
Roche Holding AG 1.31%
LVMH Moet Hennessy Louis Vuitton SE 1.08%
Novartis AG 1.0%
Toyota Motor Corp 0.92%
AstraZeneca PLC 0.78%
Unilever PLC 0.76%
AIA Group Ltd 0.74%
SAP SE 0.73%

IEFA’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 1.77%, 1.43%, 1.31%, 1.08%, and 1.0%.

Toyota Motor Corp (0.92%), AstraZeneca PLC (0.78%), and Unilever PLC (0.76%) have a slightly smaller but still significant weight. AIA Group Ltd and SAP SE are also represented in the IEFA’s holdings at 0.74% and 0.73%.

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%.

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Performance

Annual Returns

IEFA vs. MTUM - Annual Returns

Year IEFA MTUM
2020 8.55% 29.69%
2019 22.67% 27.57%
2018 -14.2% -1.77%
2017 26.42% 37.6%
2016 1.36% 4.89%
2015 0.53% 9.12%
2014 -4.82% 14.48%
2013 23.73% 0.0%
2012 0.0% 0.0%
2011 0.0% 0.0%
2010 0.0% 0.0%

IEFA had its best year in 2017 with an annual return of 26.42%. IEFA’s worst year over the past decade yielded -14.2% and occurred in 2018. In most years the iShares Core MSCI EAFE ETF provided moderate returns such as in 2010, 2015, and 2016 where annual returns amounted to 0.0%, 0.53%, and 1.36% 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

IEFA vs. MTUM - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IEFA $10,000 $14,008 5.79%
MTUM $10,000 $29,301 17.37%

A $10,000 investment in IEFA would have resulted in a final balance of $14,008. This is a profit of $4,008 over 7 years and amounts to a compound annual growth rate (CAGR) of 5.79%.

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%.

IEFA’s CAGR is 11.58 percentage points lower than that of MTUM and as a result, would have yielded $15,293 less on a $10,000 investment. Thus, IEFA performed worse than MTUM by 11.58% annually.


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