The iShares Russell 1000 Value ETF (IWD) and the iShares MBS ETF (MBB) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and MBB is a iShares Intermediate Government fund. So, what’s the difference between IWD and MBB? And which fund is better?
The expense ratio of IWD is 0.13 percentage points higher than MBB’s (0.19% vs. 0.06%). IWD also has a high exposure to the financial services sector while MBB is mostly comprised of AAA bonds. Overall, IWD has provided higher returns than MBB over the past ten years.
In this article, we’ll compare IWD vs. MBB. We’ll look at industry exposure and holdings, as well as at their risk metrics and annual returns. Moreover, I’ll also discuss IWD’s and MBB’s performance, portfolio growth, and fund composition and examine how these affect their overall returns.
Summary
| IWD | MBB | |
| Name | iShares Russell 1000 Value ETF | iShares MBS ETF |
| Category | Large Value | Intermediate Government |
| Issuer | iShares | iShares |
| AUM | 54.1B | 25.69B |
| Avg. Return | 11.40% | 3.08% |
| Div. Yield | 1.57% | 1.88% |
| Expense Ratio | 0.19% | 0.06% |
The iShares Russell 1000 Value ETF (IWD) is a Large Value fund that is issued by iShares. It currently has 54.1B total assets under management and has yielded an average annual return of 11.40% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.19%.
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%.
IWD’s dividend yield is 0.31% lower than that of MBB (1.57% vs. 1.88%). Also, IWD yielded on average 8.32% more per year over the past decade (11.40% vs. 3.08%). The expense ratio of IWD is 0.13 percentage points higher than MBB’s (0.19% vs. 0.06%).
Fund Composition
Holdings
| IWD Holdings | Weight |
| Berkshire Hathaway Inc Class B | 2.58% |
| JPMorgan Chase & Co | 2.25% |
| Johnson & Johnson | 2.24% |
| UnitedHealth Group Inc | 1.78% |
| Procter & Gamble Co | 1.71% |
| The Walt Disney Co | 1.5% |
| Bank of America Corp | 1.43% |
| Comcast Corp Class A | 1.33% |
| Exxon Mobil Corp | 1.2% |
| Pfizer Inc | 1.18% |
IWD’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.58%, 2.25%, 2.24%, 1.78%, and 1.71%.
The Walt Disney Co (1.5%), Bank of America Corp (1.43%), and Comcast Corp Class A (1.33%) have a slightly smaller but still significant weight. Exxon Mobil Corp and Pfizer Inc are also represented in the IWD’s holdings at 1.2% and 1.18%.
| 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
| IWD | MBB | |
| Mean Return | 1.03 | 0.2 |
| R-squared | 92.38 | 74.38 |
| Std. Deviation | 14.35 | 2.12 |
| Alpha | -3.23 | 0.14 |
| Beta | 1.02 | 0.6 |
| Sharpe Ratio | 0.81 | 0.87 |
| Treynor Ratio | 11.06 | 3.02 |
The iShares Russell 1000 Value ETF (IWD) has a Sharpe Ratio of 0.81 with a Standard Deviation of 14.35 and a Treynor Ratio of 11.06. Its R-squared is 92.38 while IWD’s Alpha is -3.23. Furthermore, the fund has a Mean Return of 1.03 and a Beta of 1.02.
The iShares MBS ETF (MBB) has a Alpha of 0.14 with a Beta of 0.6 and a Standard Deviation of 2.12. Its Sharpe Ratio is 0.87 while MBB’s Mean Return is 0.2. Furthermore, the fund has a Treynor Ratio of 3.02 and a R-squared of 74.38.
IWD’s Mean Return is 0.83 points higher than that of MBB and its R-squared is 18.00 points higher. With a Standard Deviation of 14.35, IWD is slightly more volatile than MBB. The Alpha and Beta of IWD are 3.37 points lower and 0.42 points higher than MBB’s Alpha and Beta.
Performance
Annual Returns
| Year | IWD | MBB |
| 2020 | 2.67% | 4.03% |
| 2019 | 26.34% | 6.27% |
| 2018 | -8.4% | 0.81% |
| 2017 | 13.47% | 2.37% |
| 2016 | 17.09% | 1.28% |
| 2015 | -3.95% | 1.28% |
| 2014 | 13.21% | 6.16% |
| 2013 | 32.18% | -1.92% |
| 2012 | 17.28% | 2.23% |
| 2011 | 0.21% | 5.88% |
| 2010 | 15.3% | 5.44% |
IWD had its best year in 2013 with an annual return of 32.18%. IWD’s worst year over the past decade yielded -8.4% and occurred in 2018. In most years the iShares Russell 1000 Value ETF provided moderate returns such as in 2014, 2017, and 2010 where annual returns amounted to 13.21%, 13.47%, and 15.3% 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
| Fund | Initial Balance | Final Balance | CAGR |
| IWD | $10,000 | $30,746 | 11.40% |
| MBB | $10,000 | $13,906 | 3.08% |
A $10,000 investment in IWD would have resulted in a final balance of $30,746. This is a profit of $20,746 over 11 years and amounts to a compound annual growth rate (CAGR) of 11.40%.
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%.
IWD’s CAGR is 8.32 percentage points higher than that of MBB and as a result, would have yielded $16,840 more on a $10,000 investment. Thus, IWD outperformed MBB by 8.32% annually.
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