IWB vs. USMV: What’s The Difference?

The iShares Russell 1000 ETF (IWB) and the iShares MSCI USA Min Vol Factor ETF (USMV) are both among the Top 100 ETFs. IWB is a iShares Large Blend fund and USMV is a iShares Large Blend fund. So, what’s the difference between IWB and USMV? And which fund is better?

IWB and USMV have the same expense ratio: 0.15%. IWB also has a higher exposure to the technology sector and a higher standard deviation. Overall, IWB has provided higher returns than USMV over the past ten years.

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

Summary

IWB USMV
Name iShares Russell 1000 ETF iShares MSCI USA Min Vol Factor ETF
Category Large Blend Large Blend
Issuer iShares iShares
AUM 30.54B 27.6B
Avg. Return 14.64% 13.89%
Div. Yield 1.14% 1.5%
Expense Ratio 0.15% 0.15%

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 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%.

IWB’s dividend yield is 0.36% lower than that of USMV (1.14% vs. 1.5%). Also, IWB yielded on average 0.74% more per year over the past decade (14.64% vs. 13.89%). IWB and USMV have the same expense ratio: 0.15%.

Fund Composition

Industry Exposure

IWB vs. USMV - Industry Exposure

IWB USMV
Technology 25.33% 20.53%
Industrials 8.88% 10.51%
Energy 2.44% 0.21%
Communication Services 10.83% 11.03%
Utilities 2.36% 6.93%
Healthcare 13.35% 18.42%
Consumer Defensive 5.97% 12.82%
Real Estate 3.34% 2.73%
Financial Services 13.64% 9.65%
Consumer Cyclical 11.85% 5.53%
Basic Materials 2.02% 1.65%

The iShares Russell 1000 ETF (IWB) has the most exposure to the Technology sector at 25.33%. This is followed by Financial Services and Healthcare at 13.64% and 13.35% respectively. Utilities (2.36%), Energy (2.44%), and Real Estate (3.34%) only make up 8.14% of the fund’s total assets.

IWB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.88%, 10.83%, 11.85%, and 13.35%.

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%.

IWB is 4.80% more exposed to the Technology sector than USMV (25.33% vs 20.53%). IWB’s exposure to Financial Services and Healthcare stocks is 3.99% higher and 5.07% lower respectively (13.64% vs. 9.65% and 13.35% vs. 18.42%). In total, Utilities, Energy, and Real Estate also make up 1.73% less of the fund’s holdings compared to USMV (8.14% vs. 9.87%).

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%.

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

IWB USMV
Mean Return 1.27 0
R-squared 99.73 0
Std. Deviation 13.87 0
Alpha -0.38 0
Beta 1.02 0
Sharpe Ratio 1.05 0
Treynor Ratio 14.31 0

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

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

IWB’s Mean Return is 1.27 points higher than that of USMV and its R-squared is 99.73 points higher. With a Standard Deviation of 13.87, IWB is slightly more volatile than USMV. The Alpha and Beta of IWB are 0.38 points lower and 1.02 points higher than USMV’s Alpha and Beta.

Performance

Annual Returns

IWB vs. USMV - Annual Returns

Year IWB USMV
2020 20.8% 5.6%
2019 31.26% 27.77%
2018 -4.91% 1.36%
2017 21.53% 18.97%
2016 11.91% 10.5%
2015 0.82% 5.5%
2014 13.08% 16.34%
2013 32.93% 25.11%
2012 16.27% 11.04%
2011 1.36% 0.0%
2010 15.94% 0.0%

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 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

IWB vs. USMV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWB $10,000 $31,077 14.64%
USMV $10,000 $27,607 13.89%

A $10,000 investment in IWB would have resulted in a final balance of $31,077. This is a profit of $21,077 over 8 years and amounts to a compound annual growth rate (CAGR) of 14.64%.

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%.

IWB’s CAGR is 0.74 percentage points higher than that of USMV and as a result, would have yielded $3,470 more on a $10,000 investment. Thus, IWB outperformed USMV by 0.74% 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