IVW vs. MBB: What’s The Difference?

The iShares S&P 500 Growth ETF (IVW) and the iShares MBS ETF (MBB) are both among the Top 100 ETFs. IVW is a iShares Large Growth fund and MBB is a iShares Intermediate Government fund. So, what’s the difference between IVW and MBB? And which fund is better?

The expense ratio of IVW is 0.12 percentage points higher than MBB’s (0.18% vs. 0.06%). IVW also has a high exposure to the technology sector while MBB is mostly comprised of AAA bonds. Overall, IVW has provided higher returns than MBB over the past ten years.

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

Summary

IVW MBB
Name iShares S&P 500 Growth ETF iShares MBS ETF
Category Large Growth Intermediate Government
Issuer iShares iShares
AUM 35.72B 25.69B
Avg. Return 16.74% 3.08%
Div. Yield 0.61% 1.88%
Expense Ratio 0.18% 0.06%

The iShares S&P 500 Growth ETF (IVW) is a Large Growth fund that is issued by iShares. It currently has 35.72B total assets under management and has yielded an average annual return of 16.74% over the past 10 years. The fund has a dividend yield of 0.61% with an expense ratio of 0.18%.

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%.

IVW’s dividend yield is 1.27% lower than that of MBB (0.61% vs. 1.88%). Also, IVW yielded on average 13.66% more per year over the past decade (16.74% vs. 3.08%). The expense ratio of IVW is 0.12 percentage points higher than MBB’s (0.18% vs. 0.06%).

Fund Composition

Holdings

IVW - Holdings

IVW Holdings Weight
Apple Inc 11.46%
Microsoft Corp 10.75%
Amazon.com Inc 7.14%
Facebook Inc Class A 4.28%
Alphabet Inc Class A 4.06%
Alphabet Inc Class C 3.86%
Tesla Inc 2.65%
NVIDIA Corp 2.43%
PayPal Holdings Inc 1.62%
Adobe Inc 1.49%

IVW’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 11.46%, 10.75%, 7.14%, 4.28%, and 4.06%.

Alphabet Inc Class C (3.86%), Tesla Inc (2.65%), and NVIDIA Corp (2.43%) have a slightly smaller but still significant weight. PayPal Holdings Inc and Adobe Inc are also represented in the IVW’s holdings at 1.62% and 1.49%.

MBB - Holdings

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

IVW MBB
Mean Return 1.44 0.2
R-squared 93.82 74.38
Std. Deviation 13.77 2.12
Alpha 2.19 0.14
Beta 0.98 0.6
Sharpe Ratio 1.21 0.87
Treynor Ratio 17.24 3.02

The iShares S&P 500 Growth ETF (IVW) has a Standard Deviation of 13.77 with a Sharpe Ratio of 1.21 and a Treynor Ratio of 17.24. Its Beta is 0.98 while IVW’s R-squared is 93.82. Furthermore, the fund has a Alpha of 2.19 and a Mean Return of 1.44.

The iShares MBS ETF (MBB) has a Alpha of 0.14 with a Treynor Ratio of 3.02 and a Mean Return of 0.2. Its Beta is 0.6 while MBB’s Sharpe Ratio is 0.87. Furthermore, the fund has a R-squared of 74.38 and a Standard Deviation of 2.12.

IVW’s Mean Return is 1.24 points higher than that of MBB and its R-squared is 19.44 points higher. With a Standard Deviation of 13.77, IVW is slightly more volatile than MBB. The Alpha and Beta of IVW are 2.05 points higher and 0.38 points higher than MBB’s Alpha and Beta.

Performance

Annual Returns

IVW vs. MBB - Annual Returns

Year IVW MBB
2020 33.21% 4.03%
2019 30.91% 6.27%
2018 -0.17% 0.81%
2017 27.2% 2.37%
2016 6.74% 1.28%
2015 5.33% 1.28%
2014 14.67% 6.16%
2013 32.48% -1.92%
2012 14.39% 2.23%
2011 4.49% 5.88%
2010 14.84% 5.44%

IVW had its best year in 2020 with an annual return of 33.21%. IVW’s worst year over the past decade yielded -0.17% and occurred in 2018. In most years the iShares S&P 500 Growth ETF provided moderate returns such as in 2012, 2014, and 2010 where annual returns amounted to 14.39%, 14.67%, and 14.84% 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

IVW vs. MBB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IVW $10,000 $51,915 16.74%
MBB $10,000 $13,906 3.08%

A $10,000 investment in IVW would have resulted in a final balance of $51,915. This is a profit of $41,915 over 11 years and amounts to a compound annual growth rate (CAGR) of 16.74%.

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%.

IVW’s CAGR is 13.66 percentage points higher than that of MBB and as a result, would have yielded $38,009 more on a $10,000 investment. Thus, IVW outperformed MBB by 13.66% annually.


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