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MBB vs. ACWI: What’s The Difference?

The iShares MBS ETF (MBB) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. MBB is a iShares Intermediate Government fund and ACWI is a iShares N/A fund. So, what’s the difference between MBB and ACWI? And which fund is better?

The expense ratio of MBB is 0.26 percentage points lower than ACWI’s (0.06% vs. 0.32%). MBB is mostly comprised of AAA bonds while ACWI has a high exposure to the technology sector. Overall, MBB has provided lower returns than ACWI over the past 11 years.

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

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Summary

MBBACWI
NameiShares MBS ETFiShares MSCI ACWI ETF
CategoryIntermediate GovernmentN/A
IssueriSharesiShares
AUM25.69B16.85B
Avg. Return3.08%10.21%
Div. Yield1.88%1.39%
Expense Ratio0.06%0.32%

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%.

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

MBB’s dividend yield is 0.49% higher than that of ACWI (1.88% vs. 1.39%). Also, MBB yielded on average 7.14% less per year over the past decade (3.08% vs. 10.21%). The expense ratio of MBB is 0.26 percentage points lower than ACWI’s (0.06% vs. 0.32%).

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Fund Composition

Holdings

MBB - Holdings

MBB Bond SectorsWeight
AAA99.51%
Others0.49%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

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.

ACWI - Holdings

ACWI HoldingsWeight
Apple Inc3.44%
Microsoft Corp2.91%
Amazon.com Inc2.21%
Facebook Inc A1.25%
Alphabet Inc Class C1.12%
Alphabet Inc A1.09%
Taiwan Semiconductor Manufacturing Co Ltd0.79%
Tesla Inc0.78%
NVIDIA Corp0.74%
JPMorgan Chase & Co0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

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Risk Analysis

MBBACWI
Mean Return0.20.89
R-squared74.3899.96
Std. Deviation2.1214.05
Alpha0.140.15
Beta0.61
Sharpe Ratio0.870.71
Treynor Ratio3.029.45

The iShares MBS ETF (MBB) has a Treynor Ratio of 3.02 with a Alpha of 0.14 and a R-squared of 74.38. Its Sharpe Ratio is 0.87 while MBB’s Mean Return is 0.2. Furthermore, the fund has a Standard Deviation of 2.12 and a Beta of 0.6.

The iShares MSCI ACWI ETF (ACWI) has a Sharpe Ratio of 0.71 with a Standard Deviation of 14.05 and a R-squared of 99.96. Its Treynor Ratio is 9.45 while ACWI’s Alpha is 0.15. Furthermore, the fund has a Mean Return of 0.89 and a Beta of 1.

MBB’s Mean Return is 0.69 points lower than that of ACWI and its R-squared is 25.58 points lower. With a Standard Deviation of 2.12, MBB is slightly less volatile than ACWI. The Alpha and Beta of MBB are 0.01 points lower and 0.40 points lower than ACWI’s Alpha and Beta.

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Performance

Annual Returns

MBB vs. ACWI - Annual Returns

YearMBBACWI
20204.03%16.38%
20196.27%26.7%
20180.81%-9.15%
20172.37%24.35%
20161.28%8.22%
20151.28%-2.39%
20146.16%4.64%
2013-1.92%22.91%
20122.23%15.99%
20115.88%-7.6%
20105.44%12.31%

MBB had its best year in 2019 with an annual return of 6.27%. MBB’s worst year over the past decade yielded -1.92% and occurred in 2013. In most years the iShares MBS ETF provided moderate returns such as in 2012, 2017, and 2020 where annual returns amounted to 2.23%, 2.37%, and 4.03% respectively.

The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.

Portfolio Growth

MBB vs. ACWI - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
MBB$10,000$13,9063.08%
ACWI$10,000$27,24110.21%

A $10,000 investment in MBB would have resulted in a final balance of $13,906. This is a profit of $3,906 over 11 years and amounts to a compound annual growth rate (CAGR) of 3.08%.

With a $10,000 investment in ACWI, the end total would have been $27,241. This equates to a $17,241 profit over 11 years and a compound annual growth rate (CAGR) of 10.21%.

MBB’s CAGR is 7.14 percentage points lower than that of ACWI and as a result, would have yielded $13,335 less on a $10,000 investment. Thus, MBB performed worse than ACWI by 7.14% annually.


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