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.
|Name||iShares Russell 1000 ETF||iShares MBS ETF|
|Category||Large Blend||Intermediate Government|
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%).
|Facebook Inc Class A||2.03%|
|Alphabet Inc Class A||1.93%|
|Alphabet Inc Class C||1.82%|
|Berkshire Hathaway Inc Class B||1.24%|
|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 Bond Sectors||Weight|
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.
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.
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.
|Fund||Initial Balance||Final Balance||CAGR|
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.
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