IWR vs. USMV: What’s The Difference?

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

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

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

Summary

IWR USMV
Name iShares Russell Mid-Cap ETF iShares MSCI USA Min Vol Factor ETF
Category Mid-Cap Blend Large Blend
Issuer iShares iShares
AUM 29.84B 27.6B
Avg. Return 14.15% 13.89%
Div. Yield 0.99% 1.5%
Expense Ratio 0.19% 0.15%

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 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%.

IWR’s dividend yield is 0.51% lower than that of USMV (0.99% vs. 1.5%). Also, IWR yielded on average 0.26% more per year over the past decade (14.15% vs. 13.89%). The expense ratio of IWR is 0.04 percentage points higher than USMV’s (0.19% vs. 0.15%).

Fund Composition

Industry Exposure

IWR vs. USMV - Industry Exposure

IWR USMV
Technology 19.67% 20.53%
Industrials 14.54% 10.51%
Energy 3.48% 0.21%
Communication Services 4.64% 11.03%
Utilities 4.46% 6.93%
Healthcare 11.76% 18.42%
Consumer Defensive 3.82% 12.82%
Real Estate 8.31% 2.73%
Financial Services 11.64% 9.65%
Consumer Cyclical 13.59% 5.53%
Basic Materials 4.1% 1.65%

The iShares Russell Mid-Cap ETF (IWR) has the most exposure to the Technology sector at 19.67%. This is followed by Industrials and Consumer Cyclical at 14.54% and 13.59% respectively. Consumer Defensive (3.82%), Basic Materials (4.1%), and Utilities (4.46%) only make up 12.38% of the fund’s total assets.

IWR’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Healthcare, and Consumer Cyclical stocks at 4.64%, 8.31%, 11.64%, 11.76%, and 13.59%.

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%.

IWR is 0.86% less exposed to the Technology sector than USMV (19.67% vs 20.53%). IWR’s exposure to Industrials and Consumer Cyclical stocks is 4.03% higher and 8.06% higher respectively (14.54% vs. 10.51% and 13.59% vs. 5.53%). In total, Consumer Defensive, Basic Materials, and Utilities also make up 9.02% less of the fund’s holdings compared to USMV (12.38% vs. 21.40%).

Holdings

IWR - 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%.

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

IWR USMV
Mean Return 1.17 0
R-squared 91.52 0
Std. Deviation 15.66 0
Alpha -2.8 0
Beta 1.11 0
Sharpe Ratio 0.86 0
Treynor Ratio 11.72 0

The iShares Russell Mid-Cap ETF (IWR) has a Alpha of -2.8 with a Mean Return of 1.17 and a Beta of 1.11. Its Treynor Ratio is 11.72 while IWR’s Standard Deviation is 15.66. Furthermore, the fund has a Sharpe Ratio of 0.86 and a R-squared of 91.52.

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

IWR’s Mean Return is 1.17 points higher than that of USMV and its R-squared is 91.52 points higher. With a Standard Deviation of 15.66, IWR is slightly more volatile than USMV. The Alpha and Beta of IWR are 2.80 points lower and 1.11 points higher than USMV’s Alpha and Beta.

Performance

Annual Returns

IWR vs. USMV - Annual Returns

Year IWR USMV
2020 16.91% 5.6%
2019 30.31% 27.77%
2018 -9.13% 1.36%
2017 18.32% 18.97%
2016 13.58% 10.5%
2015 -2.57% 5.5%
2014 13.03% 16.34%
2013 34.5% 25.11%
2012 17.13% 11.04%
2011 -1.67% 0.0%
2010 25.25% 0.0%

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 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

IWR vs. USMV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWR $10,000 $27,556 14.15%
USMV $10,000 $27,607 13.89%

A $10,000 investment in IWR would have resulted in a final balance of $27,556. This is a profit of $17,556 over 8 years and amounts to a compound annual growth rate (CAGR) of 14.15%.

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%.

IWR’s CAGR is 0.26 percentage points higher than that of USMV and as a result, would have yielded $51 less on a $10,000 investment. Thus, IWR outperformed USMV by 0.26% annually.


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