IWB vs. MBB: What’s The Difference?

The iShares Russell 1000 ETF (IWB) and the iShares MBS ETF (MBB) are both among the Top 100 ETFs. IWB is a iShares Large Blend fund and MBB is a iShares Intermediate Government fund. So, what’s the difference between IWB and MBB? And which fund is better?

The expense ratio of IWB is 0.09 percentage points higher than MBB’s (0.15% vs. 0.06%). IWB also has a high exposure to the technology sector while MBB is mostly comprised of AAA bonds. Overall, IWB has provided higher returns than MBB over the past ten years.

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

Summary

IWB MBB
Name iShares Russell 1000 ETF iShares MBS ETF
Category Large Blend Intermediate Government
Issuer iShares iShares
AUM 30.54B 25.69B
Avg. Return 14.64% 3.08%
Div. Yield 1.14% 1.88%
Expense Ratio 0.15% 0.06%

The iShares Russell 1000 ETF (IWB) is a Large Blend fund that is issued by iShares. It currently has 30.54B total assets under management and has yielded an average annual return of 14.64% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.15%.

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%.

IWB’s dividend yield is 0.74% lower than that of MBB (1.14% vs. 1.88%). Also, IWB yielded on average 11.56% more per year over the past decade (14.64% vs. 3.08%). The expense ratio of IWB is 0.09 percentage points higher than MBB’s (0.15% vs. 0.06%).

Fund Composition

Holdings

IWB - Holdings

IWB Holdings Weight
Apple Inc 5.45%
Microsoft Corp 5.11%
Amazon.com Inc 3.43%
Facebook Inc Class A 2.03%
Alphabet Inc Class A 1.93%
Alphabet Inc Class C 1.82%
Tesla Inc 1.27%
Berkshire Hathaway Inc Class B 1.24%
NVIDIA Corp 1.11%
JPMorgan Chase & Co 1.09%

IWB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.45%, 5.11%, 3.43%, 2.03%, and 1.93%.

Alphabet Inc Class C (1.82%), Tesla Inc (1.27%), and Berkshire Hathaway Inc Class B (1.24%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the IWB’s holdings at 1.11% and 1.09%.

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

IWB MBB
Mean Return 1.27 0.2
R-squared 99.73 74.38
Std. Deviation 13.87 2.12
Alpha -0.38 0.14
Beta 1.02 0.6
Sharpe Ratio 1.05 0.87
Treynor Ratio 14.31 3.02

The iShares Russell 1000 ETF (IWB) has a R-squared of 99.73 with a Sharpe Ratio of 1.05 and a Mean Return of 1.27. Its Standard Deviation is 13.87 while IWB’s Beta is 1.02. Furthermore, the fund has a Treynor Ratio of 14.31 and a Alpha of -0.38.

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

IWB’s Mean Return is 1.07 points higher than that of MBB and its R-squared is 25.35 points higher. With a Standard Deviation of 13.87, IWB is slightly more volatile than MBB. The Alpha and Beta of IWB are 0.52 points lower and 0.42 points higher than MBB’s Alpha and Beta.

Performance

Annual Returns

IWB vs. MBB - Annual Returns

Year IWB MBB
2020 20.8% 4.03%
2019 31.26% 6.27%
2018 -4.91% 0.81%
2017 21.53% 2.37%
2016 11.91% 1.28%
2015 0.82% 1.28%
2014 13.08% 6.16%
2013 32.93% -1.92%
2012 16.27% 2.23%
2011 1.36% 5.88%
2010 15.94% 5.44%

IWB had its best year in 2013 with an annual return of 32.93%. IWB’s worst year over the past decade yielded -4.91% and occurred in 2018. In most years the iShares Russell 1000 ETF provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.08%, 15.94%, and 16.27% 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

IWB vs. MBB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWB $10,000 $42,462 14.64%
MBB $10,000 $13,906 3.08%

A $10,000 investment in IWB would have resulted in a final balance of $42,462. This is a profit of $32,462 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.64%.

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%.

IWB’s CAGR is 11.56 percentage points higher than that of MBB and as a result, would have yielded $28,556 more on a $10,000 investment. Thus, IWB outperformed MBB by 11.56% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply