The iShares Russell Mid-Cap ETF (IWR) and the iShares MBS ETF (MBB) are both among the Top 100 ETFs. IWR is a iShares Mid-Cap Blend fund and MBB is a iShares Intermediate Government fund. So, what’s the difference between IWR and MBB? And which fund is better?
The expense ratio of IWR is 0.13 percentage points higher than MBB’s (0.19% vs. 0.06%). IWR also has a high exposure to the technology sector while MBB is mostly comprised of AAA bonds. Overall, IWR has provided higher returns than MBB over the past ten years.
In this article, we’ll compare IWR vs. MBB. We’ll look at industry exposure and risk metrics, as well as at their holdings and performance. Moreover, I’ll also discuss IWR’s and MBB’s annual returns, portfolio growth, and fund composition and examine how these affect their overall returns.
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Summary
| IWR | MBB | |
| Name | iShares Russell Mid-Cap ETF | iShares MBS ETF |
| Category | Mid-Cap Blend | Intermediate Government |
| Issuer | iShares | iShares |
| AUM | 29.84B | 25.69B |
| Avg. Return | 14.15% | 3.08% |
| Div. Yield | 0.99% | 1.88% |
| Expense Ratio | 0.19% | 0.06% |
The iShares Russell Mid-Cap ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% 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%.
IWR’s dividend yield is 0.89% lower than that of MBB (0.99% vs. 1.88%). Also, IWR yielded on average 11.08% more per year over the past decade (14.15% vs. 3.08%). The expense ratio of IWR is 0.13 percentage points higher than MBB’s (0.19% vs. 0.06%).
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Fund Composition
Holdings
| IWR Holdings | Weight |
| IDEXX Laboratories Inc | 0.51% |
| DocuSign Inc | 0.51% |
| Twitter Inc | 0.48% |
| Chipotle Mexican Grill Inc | 0.47% |
| Roku Inc Class A | 0.44% |
| Marvell Technology Inc | 0.44% |
| DexCom Inc | 0.44% |
| Trane Technologies PLC | 0.43% |
| MSCI Inc | 0.43% |
| Carrier Global Corp Ordinary Shares | 0.43% |
IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.
Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.
| 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
| IWR | MBB | |
| Mean Return | 1.17 | 0.2 |
| R-squared | 91.52 | 74.38 |
| Std. Deviation | 15.66 | 2.12 |
| Alpha | -2.8 | 0.14 |
| Beta | 1.11 | 0.6 |
| Sharpe Ratio | 0.86 | 0.87 |
| Treynor Ratio | 11.72 | 3.02 |
The iShares Russell Mid-Cap ETF (IWR) has a Beta of 1.11 with a Mean Return of 1.17 and a Sharpe Ratio of 0.86. Its Alpha is -2.8 while IWR’s Treynor Ratio is 11.72. Furthermore, the fund has a Standard Deviation of 15.66 and a R-squared of 91.52.
The iShares MBS ETF (MBB) has a Standard Deviation of 2.12 with a Sharpe Ratio of 0.87 and a R-squared of 74.38. Its Mean Return is 0.2 while MBB’s Alpha is 0.14. Furthermore, the fund has a Beta of 0.6 and a Treynor Ratio of 3.02.
IWR’s Mean Return is 0.97 points higher than that of MBB and its R-squared is 17.14 points higher. With a Standard Deviation of 15.66, IWR is slightly more volatile than MBB. The Alpha and Beta of IWR are 2.94 points lower and 0.51 points higher than MBB’s Alpha and Beta.
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Performance
Annual Returns
| Year | IWR | MBB |
| 2020 | 16.91% | 4.03% |
| 2019 | 30.31% | 6.27% |
| 2018 | -9.13% | 0.81% |
| 2017 | 18.32% | 2.37% |
| 2016 | 13.58% | 1.28% |
| 2015 | -2.57% | 1.28% |
| 2014 | 13.03% | 6.16% |
| 2013 | 34.5% | -1.92% |
| 2012 | 17.13% | 2.23% |
| 2011 | -1.67% | 5.88% |
| 2010 | 25.25% | 5.44% |
IWR had its best year in 2013 with an annual return of 34.5%. IWR’s worst year over the past decade yielded -9.13% and occurred in 2018. In most years the iShares Russell Mid-Cap ETF provided moderate returns such as in 2016, 2020, and 2012 where annual returns amounted to 13.58%, 16.91%, and 17.13% 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 |
| IWR | $10,000 | $39,751 | 14.15% |
| MBB | $10,000 | $13,906 | 3.08% |
A $10,000 investment in IWR would have resulted in a final balance of $39,751. This is a profit of $29,751 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.15%.
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%.
IWR’s CAGR is 11.08 percentage points higher than that of MBB and as a result, would have yielded $25,845 more on a $10,000 investment. Thus, IWR outperformed MBB by 11.08% annually.
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