IWD vs. USMV: What’s The Difference?

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

The expense ratio of IWD is 0.04 percentage points higher than USMV’s (0.19% vs. 0.15%). IWD also has a higher exposure to the financial services sector and a higher standard deviation. Overall, IWD has provided lower returns than USMV over the past ten years.

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

Summary

IWD USMV
Name iShares Russell 1000 Value ETF iShares MSCI USA Min Vol Factor ETF
Category Large Value Large Blend
Issuer iShares iShares
AUM 54.1B 27.6B
Avg. Return 11.40% 13.89%
Div. Yield 1.57% 1.5%
Expense Ratio 0.19% 0.15%

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 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%.

IWD’s dividend yield is 0.07% higher than that of USMV (1.57% vs. 1.5%). Also, IWD yielded on average 2.49% less per year over the past decade (11.40% vs. 13.89%). The expense ratio of IWD is 0.04 percentage points higher than USMV’s (0.19% vs. 0.15%).

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Fund Composition

Industry Exposure

IWD vs. USMV - Industry Exposure

IWD USMV
Technology 10.28% 20.53%
Industrials 11.77% 10.51%
Energy 4.76% 0.21%
Communication Services 8.67% 11.03%
Utilities 4.88% 6.93%
Healthcare 17.78% 18.42%
Consumer Defensive 7.76% 12.82%
Real Estate 4.94% 2.73%
Financial Services 20.43% 9.65%
Consumer Cyclical 5.62% 5.53%
Basic Materials 3.1% 1.65%

The iShares Russell 1000 Value ETF (IWD) has the most exposure to the Financial Services sector at 20.43%. This is followed by Healthcare and Industrials at 17.78% and 11.77% respectively. Energy (4.76%), Utilities (4.88%), and Real Estate (4.94%) only make up 14.58% of the fund’s total assets.

IWD’s mid-section with moderate exposure is comprised of Consumer Cyclical, Consumer Defensive, Communication Services, Technology, and Industrials stocks at 5.62%, 7.76%, 8.67%, 10.28%, and 11.77%.

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%.

IWD is 10.78% more exposed to the Financial Services sector than USMV (20.43% vs 9.65%). IWD’s exposure to Healthcare and Industrials stocks is 0.64% lower and 1.26% higher respectively (17.78% vs. 18.42% and 11.77% vs. 10.51%). In total, Energy, Utilities, and Real Estate also make up 4.71% more of the fund’s holdings compared to USMV (14.58% vs. 9.87%).

Holdings

IWD - 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%.

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%.

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Risk Analysis

IWD USMV
Mean Return 1.03 0
R-squared 92.38 0
Std. Deviation 14.35 0
Alpha -3.23 0
Beta 1.02 0
Sharpe Ratio 0.81 0
Treynor Ratio 11.06 0

The iShares Russell 1000 Value ETF (IWD) has a Standard Deviation of 14.35 with a Treynor Ratio of 11.06 and a Beta of 1.02. Its Sharpe Ratio is 0.81 while IWD’s R-squared is 92.38. Furthermore, the fund has a Alpha of -3.23 and a Mean Return of 1.03.

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

IWD’s Mean Return is 1.03 points higher than that of USMV and its R-squared is 92.38 points higher. With a Standard Deviation of 14.35, IWD is slightly more volatile than USMV. The Alpha and Beta of IWD are 3.23 points lower and 1.02 points higher than USMV’s Alpha and Beta.

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Performance

Annual Returns

IWD vs. USMV - Annual Returns

Year IWD USMV
2020 2.67% 5.6%
2019 26.34% 27.77%
2018 -8.4% 1.36%
2017 13.47% 18.97%
2016 17.09% 10.5%
2015 -3.95% 5.5%
2014 13.21% 16.34%
2013 32.18% 25.11%
2012 17.28% 11.04%
2011 0.21% 0.0%
2010 15.3% 0.0%

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 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

IWD vs. USMV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWD $10,000 $22,689 11.40%
USMV $10,000 $27,607 13.89%

A $10,000 investment in IWD would have resulted in a final balance of $22,689. This is a profit of $12,689 over 8 years and amounts to a compound annual growth rate (CAGR) of 11.40%.

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%.

IWD’s CAGR is 2.49 percentage points lower than that of USMV and as a result, would have yielded $4,918 less on a $10,000 investment. Thus, IWD performed worse than USMV by 2.49% annually.


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