MBB vs. DGRO: What’s The Difference?

The iShares MBS ETF (MBB) and the iShares Core Dividend Growth ETF (DGRO) are both among the Top 100 ETFs. MBB is a iShares Intermediate Government fund and DGRO is a iShares Large Value fund. So, what’s the difference between MBB and DGRO? And which fund is better?

The expense ratio of MBB is 0.02 percentage points lower than DGRO’s (0.06% vs. 0.08%). MBB is mostly comprised of AAA bonds while DGRO has a high exposure to the technology sector. Overall, MBB has provided lower returns than DGRO over the past 6 years.

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

Summary

MBB DGRO
Name iShares MBS ETF iShares Core Dividend Growth ETF
Category Intermediate Government Large Value
Issuer iShares iShares
AUM 25.69B 20B
Avg. Return 3.08% 12.46%
Div. Yield 1.88% 2.04%
Expense Ratio 0.06% 0.08%

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 Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.

MBB’s dividend yield is 0.16% lower than that of DGRO (1.88% vs. 2.04%). Also, MBB yielded on average 9.38% less per year over the past decade (3.08% vs. 12.46%). The expense ratio of MBB is 0.02 percentage points lower than DGRO’s (0.06% vs. 0.08%).

Fund Composition

Holdings

MBB - Holdings

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.

DGRO - Holdings

DGRO Holdings Weight
Microsoft Corp 3.29%
Apple Inc 3.26%
Pfizer Inc 2.89%
Johnson & Johnson 2.87%
Procter & Gamble Co 2.79%
Verizon Communications Inc 2.68%
JPMorgan Chase & Co 2.57%
The Home Depot Inc 2.35%
Merck & Co Inc 2.11%
Cisco Systems Inc 1.98%

DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.

Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.

Risk Analysis

MBB DGRO
Mean Return 0.2 0
R-squared 74.38 0
Std. Deviation 2.12 0
Alpha 0.14 0
Beta 0.6 0
Sharpe Ratio 0.87 0
Treynor Ratio 3.02 0

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

The iShares Core Dividend Growth ETF (DGRO) has a Mean Return of 0 with a Beta of 0 and a Alpha of 0. Its Standard Deviation is 0 while DGRO’s Sharpe Ratio is 0. Furthermore, the fund has a Treynor Ratio of 0 and a R-squared of 0.

MBB’s Mean Return is 0.20 points higher than that of DGRO and its R-squared is 74.38 points higher. With a Standard Deviation of 2.12, MBB is slightly more volatile than DGRO. The Alpha and Beta of MBB are 0.14 points higher and 0.60 points higher than DGRO’s Alpha and Beta.

Performance

Annual Returns

MBB vs. DGRO - Annual Returns

Year MBB DGRO
2020 4.03% 9.47%
2019 6.27% 30.02%
2018 0.81% -2.24%
2017 2.37% 22.84%
2016 1.28% 15.27%
2015 1.28% -0.62%
2014 6.16% 0.0%
2013 -1.92% 0.0%
2012 2.23% 0.0%
2011 5.88% 0.0%
2010 5.44% 0.0%

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 DGRO, returning 30.02% on an annual basis. The poorest year for DGRO in the last ten years was 2018, with a yield of -2.24%. Most years the iShares Core Dividend Growth ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

MBB vs. DGRO - Portfolio Growth

Fund Initial Balance Final Balance CAGR
MBB $10,000 $11,702 3.08%
DGRO $10,000 $19,580 12.46%

A $10,000 investment in MBB would have resulted in a final balance of $11,702. This is a profit of $1,702 over 6 years and amounts to a compound annual growth rate (CAGR) of 3.08%.

With a $10,000 investment in DGRO, the end total would have been $19,580. This equates to a $9,580 profit over 6 years and a compound annual growth rate (CAGR) of 12.46%.

MBB’s CAGR is 9.38 percentage points lower than that of DGRO and as a result, would have yielded $7,878 less on a $10,000 investment. Thus, MBB performed worse than DGRO by 9.38% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply