IVW vs. USMV: What’s The Difference?

The iShares S&P 500 Growth ETF (IVW) and the iShares MSCI USA Min Vol Factor ETF (USMV) are both among the Top 100 ETFs. IVW is a iShares Large Growth fund and USMV is a iShares Large Blend fund. So, what’s the difference between IVW and USMV? And which fund is better?

The expense ratio of IVW is 0.03 percentage points higher than USMV’s (0.18% vs. 0.15%). IVW also has a higher exposure to the technology sector and a higher standard deviation. Overall, IVW has provided higher returns than USMV over the past ten years.

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

Summary

IVW USMV
Name iShares S&P 500 Growth ETF iShares MSCI USA Min Vol Factor ETF
Category Large Growth Large Blend
Issuer iShares iShares
AUM 35.72B 27.6B
Avg. Return 16.74% 13.89%
Div. Yield 0.61% 1.5%
Expense Ratio 0.18% 0.15%

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 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%.

IVW’s dividend yield is 0.89% lower than that of USMV (0.61% vs. 1.5%). Also, IVW yielded on average 2.84% more per year over the past decade (16.74% vs. 13.89%). The expense ratio of IVW is 0.03 percentage points higher than USMV’s (0.18% vs. 0.15%).

Fund Composition

Industry Exposure

IVW vs. USMV - Industry Exposure

IVW USMV
Technology 37.8% 20.53%
Industrials 5.72% 10.51%
Energy 0.06% 0.21%
Communication Services 15.44% 11.03%
Utilities 0.47% 6.93%
Healthcare 11.88% 18.42%
Consumer Defensive 3.84% 12.82%
Real Estate 1.11% 2.73%
Financial Services 6.78% 9.65%
Consumer Cyclical 15.25% 5.53%
Basic Materials 1.65% 1.65%

The iShares S&P 500 Growth ETF (IVW) has the most exposure to the Technology sector at 37.8%. This is followed by Communication Services and Consumer Cyclical at 15.44% and 15.25% respectively. Utilities (0.47%), Real Estate (1.11%), and Basic Materials (1.65%) only make up 3.23% of the fund’s total assets.

IVW’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 3.84%, 5.72%, 6.78%, 11.88%, and 15.25%.

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%.

IVW is 17.27% more exposed to the Technology sector than USMV (37.8% vs 20.53%). IVW’s exposure to Communication Services and Consumer Cyclical stocks is 4.41% higher and 9.72% higher respectively (15.44% vs. 11.03% and 15.25% vs. 5.53%). In total, Utilities, Real Estate, and Basic Materials also make up 8.08% less of the fund’s holdings compared to USMV (3.23% vs. 11.31%).

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%.

USMV - Holdings

USMV Holdings Weight
Eli Lilly and Co 1.64%
Microsoft Corp 1.62%
T-Mobile US Inc 1.51%
Accenture PLC Class A 1.51%
Visa Inc Class A 1.49%
Waste Management Inc 1.45%
Adobe 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%.

Risk Analysis

IVW USMV
Mean Return 1.44 0
R-squared 93.82 0
Std. Deviation 13.77 0
Alpha 2.19 0
Beta 0.98 0
Sharpe Ratio 1.21 0
Treynor Ratio 17.24 0

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

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

IVW’s Mean Return is 1.44 points higher than that of USMV and its R-squared is 93.82 points higher. With a Standard Deviation of 13.77, IVW is slightly more volatile than USMV. The Alpha and Beta of IVW are 2.19 points higher and 0.98 points higher than USMV’s Alpha and Beta.

Performance

Annual Returns

IVW vs. USMV - Annual Returns

Year IVW USMV
2020 33.21% 5.6%
2019 30.91% 27.77%
2018 -0.17% 1.36%
2017 27.2% 18.97%
2016 6.74% 10.5%
2015 5.33% 5.5%
2014 14.67% 16.34%
2013 32.48% 25.11%
2012 14.39% 11.04%
2011 4.49% 0.0%
2010 14.84% 0.0%

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 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

IVW vs. USMV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IVW $10,000 $37,821 16.74%
USMV $10,000 $27,607 13.89%

A $10,000 investment in IVW would have resulted in a final balance of $37,821. This is a profit of $27,821 over 8 years and amounts to a compound annual growth rate (CAGR) of 16.74%.

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%.

IVW’s CAGR is 2.84 percentage points higher than that of USMV and as a result, would have yielded $10,214 more on a $10,000 investment. Thus, IVW outperformed USMV by 2.84% annually.


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