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IJR vs. USMV: What’s The Difference?

The iShares Core S&P Small-Cap ETF (IJR) and the iShares MSCI USA Min Vol Factor ETF (USMV) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and USMV is a iShares Large Blend fund. So, what’s the difference between IJR and USMV? And which fund is better?

The expense ratio of IJR is 0.09 percentage points lower than USMV’s (0.06% vs. 0.15%). IJR also has a higher exposure to the industrials sector and a higher standard deviation. Overall, IJR has provided higher returns than USMV over the past ten years.

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

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Summary

IJRUSMV
NameiShares Core S&P Small-Cap ETFiShares MSCI USA Min Vol Factor ETF
CategorySmall BlendLarge Blend
IssueriSharesiShares
AUM68.64B27.6B
Avg. Return13.97%13.89%
Div. Yield0.96%1.5%
Expense Ratio0.06%0.15%

The iShares Core S&P Small-Cap ETF (IJR) is a Small Blend fund that is issued by iShares. It currently has 68.64B total assets under management and has yielded an average annual return of 13.97% over the past 10 years. The fund has a dividend yield of 0.96% with an expense ratio of 0.06%.

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%.

IJR’s dividend yield is 0.54% lower than that of USMV (0.96% vs. 1.5%). Also, IJR yielded on average 0.07% more per year over the past decade (13.97% vs. 13.89%). The expense ratio of IJR is 0.09 percentage points lower than USMV’s (0.06% vs. 0.15%).

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Fund Composition

Industry Exposure

IJR vs. USMV - Industry Exposure

IJRUSMV
Technology14.32%20.53%
Industrials17.31%10.51%
Energy4.0%0.21%
Communication Services2.59%11.03%
Utilities1.8%6.93%
Healthcare11.55%18.42%
Consumer Defensive4.01%12.82%
Real Estate9.55%2.73%
Financial Services15.91%9.65%
Consumer Cyclical13.61%5.53%
Basic Materials5.34%1.65%

The iShares Core S&P Small-Cap ETF (IJR) has the most exposure to the Industrials sector at 17.31%. This is followed by Financial Services and Technology at 15.91% and 14.32% respectively. Communication Services (2.59%), Energy (4.0%), and Consumer Defensive (4.01%) only make up 10.60% of the fund’s total assets.

IJR’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Consumer Cyclical, and Technology stocks at 5.34%, 9.55%, 11.55%, 13.61%, and 14.32%.

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%.

IJR is 6.80% more exposed to the Industrials sector than USMV (17.31% vs 10.51%). IJR’s exposure to Financial Services and Technology stocks is 6.26% higher and 6.21% lower respectively (15.91% vs. 9.65% and 14.32% vs. 20.53%). In total, Communication Services, Energy, and Consumer Defensive also make up 13.46% less of the fund’s holdings compared to USMV (10.60% vs. 24.06%).

Holdings

IJR - Holdings

IJR HoldingsWeight
BlackRock Cash Funds Treasury SL Agency1.08%
GameStop Corp Class A0.86%
Omnicell Inc0.61%
Stamps.com Inc0.58%
Saia Inc0.57%
Power Integrations Inc0.57%
Exponent Inc0.54%
NeoGenomics Inc0.53%
Chart Industries Inc0.53%
Macy’s Inc0.51%

IJR’s Top Holdings are BlackRock Cash Funds Treasury SL Agency, GameStop Corp Class A, Omnicell Inc, Stamps.com Inc, and Saia Inc at 1.08%, 0.86%, 0.61%, 0.58%, and 0.57%.

Power Integrations Inc (0.57%), Exponent Inc (0.54%), and NeoGenomics Inc (0.53%) have a slightly smaller but still significant weight. Chart Industries Inc and Macy’s Inc are also represented in the IJR’s holdings at 0.53% and 0.51%.

USMV - Holdings

USMV HoldingsWeight
Eli Lilly and Co1.64%
Microsoft Corp1.62%
T-Mobile US Inc1.51%
Accenture PLC Class A1.51%
Visa Inc Class A1.49%
Waste Management Inc1.45%
Adobe Inc1.45%
The Kroger Co1.44%
Johnson & Johnson1.42%
Gilead Sciences Inc1.42%

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%.

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Risk Analysis

IJRUSMV
Mean Return1.210
R-squared76.030
Std. Deviation18.680
Alpha-3.70
Beta1.20
Sharpe Ratio0.740
Treynor Ratio10.770

The iShares Core S&P Small-Cap ETF (IJR) has a Sharpe Ratio of 0.74 with a Mean Return of 1.21 and a R-squared of 76.03. Its Treynor Ratio is 10.77 while IJR’s Alpha is -3.7. Furthermore, the fund has a Standard Deviation of 18.68 and a Beta of 1.2.

The iShares MSCI USA Min Vol Factor ETF (USMV) has a Sharpe Ratio of 0 with a Standard Deviation of 0 and a R-squared of 0. Its Treynor Ratio is 0 while USMV’s Mean Return is 0. Furthermore, the fund has a Alpha of 0 and a Beta of 0.

IJR’s Mean Return is 1.21 points higher than that of USMV and its R-squared is 76.03 points higher. With a Standard Deviation of 18.68, IJR is slightly more volatile than USMV. The Alpha and Beta of IJR are 3.70 points lower and 1.20 points higher than USMV’s Alpha and Beta.

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Performance

Annual Returns

IJR vs. USMV - Annual Returns

YearIJRUSMV
202011.24%5.6%
201922.79%27.77%
2018-8.43%1.36%
201713.2%18.97%
201626.49%10.5%
2015-2.0%5.5%
20145.67%16.34%
201341.36%25.11%
201216.28%11.04%
20110.9%0.0%
201026.14%0.0%

IJR had its best year in 2013 with an annual return of 41.36%. IJR’s worst year over the past decade yielded -8.43% and occurred in 2018. In most years the iShares Core S&P Small-Cap ETF provided moderate returns such as in 2020, 2017, and 2012 where annual returns amounted to 11.24%, 13.2%, and 16.28% 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.

Portfolio Growth

IJR vs. USMV - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IJR$10,000$26,21713.97%
USMV$10,000$27,60713.89%

A $10,000 investment in IJR would have resulted in a final balance of $26,217. This is a profit of $16,217 over 8 years and amounts to a compound annual growth rate (CAGR) of 13.97%.

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%.

IJR’s CAGR is 0.07 percentage points higher than that of USMV and as a result, would have yielded $1,390 less on a $10,000 investment. Thus, IJR outperformed USMV by 0.07% annually.


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