IGSB vs. MTUM: What’s The Difference?

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. IGSB is a iShares Short-Term Bond fund and MTUM is a iShares Large Growth fund. So, what’s the difference between IGSB and MTUM? And which fund is better?

The expense ratio of IGSB is 0.09 percentage points lower than MTUM’s (0.06% vs. 0.15%). IGSB is mostly comprised of BBB bonds while MTUM has a high exposure to the financial services sector. Overall, IGSB has provided lower returns than MTUM over the past 7 years.

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

Summary

IGSB MTUM
Name iShares 1-5 Year Investment Grade Corporate Bond ETF iShares MSCI USA Momentum Factor ETF
Category Short-Term Bond Large Growth
Issuer iShares iShares
AUM 26.63B 14.53B
Avg. Return 2.51% 17.37%
Div. Yield 2.02% 0.44%
Expense Ratio 0.06% 0.15%

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.

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%.

IGSB’s dividend yield is 1.58% higher than that of MTUM (2.02% vs. 0.44%). Also, IGSB yielded on average 14.86% less per year over the past decade (2.51% vs. 17.37%). The expense ratio of IGSB is 0.09 percentage points lower than MTUM’s (0.06% vs. 0.15%).

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Fund Composition

Holdings

IGSB - Holdings

IGSB Bond Sectors Weight
BBB 50.48%
A 40.04%
AA 7.46%
AAA 2.21%
BB 0.09%
Below B 0.0%
B 0.0%
US Government 0.0%
Others -0.28%

IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.

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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Risk Analysis

IGSB MTUM
Mean Return 0.19 0
R-squared 26.13 0
Std. Deviation 2 0
Alpha 0.69 0
Beta 0.34 0
Sharpe Ratio 0.82 0
Treynor Ratio 4.82 0

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Mean Return of 0.19 with a Beta of 0.34 and a Treynor Ratio of 4.82. Its Alpha is 0.69 while IGSB’s Sharpe Ratio is 0.82. Furthermore, the fund has a Standard Deviation of 2 and a R-squared of 26.13.

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 Standard Deviation is 0 while MTUM’s Sharpe Ratio is 0. Furthermore, the fund has a Alpha of 0 and a R-squared of 0.

IGSB’s Mean Return is 0.19 points higher than that of MTUM and its R-squared is 26.13 points higher. With a Standard Deviation of 2, IGSB is slightly more volatile than MTUM. The Alpha and Beta of IGSB are 0.69 points higher and 0.34 points higher than MTUM’s Alpha and Beta.

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Performance

Annual Returns

IGSB vs. MTUM - Annual Returns

Year IGSB MTUM
2020 5.26% 29.69%
2019 7.01% 27.57%
2018 1.34% -1.77%
2017 1.41% 37.6%
2016 1.77% 4.89%
2015 0.7% 9.12%
2014 0.74% 14.48%
2013 1.03% 0.0%
2012 3.28% 0.0%
2011 1.34% 0.0%
2010 3.69% 0.0%

IGSB had its best year in 2019 with an annual return of 7.01%. IGSB’s worst year over the past decade yielded 0.7% and occurred in 2015. In most years the iShares 1-5 Year Investment Grade Corporate Bond ETF provided moderate returns such as in 2011, 2017, and 2016 where annual returns amounted to 1.34%, 1.41%, and 1.77% 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

IGSB vs. MTUM - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IGSB $10,000 $11,950 2.51%
MTUM $10,000 $29,301 17.37%

A $10,000 investment in IGSB would have resulted in a final balance of $11,950. This is a profit of $1,950 over 7 years and amounts to a compound annual growth rate (CAGR) of 2.51%.

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%.

IGSB’s CAGR is 14.86 percentage points lower than that of MTUM and as a result, would have yielded $17,351 less on a $10,000 investment. Thus, IGSB performed worse than MTUM by 14.86% annually.


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