The iShares MBS ETF (MBB) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. MBB is a iShares Intermediate Government fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between MBB and GOVT? And which fund is better?
The expense ratio of MBB is 0.01 percentage points higher than GOVT’s (0.06% vs. 0.05%). MBB is mostly comprised of AAA bonds and GOVT has a high exposure to AAA bond. Overall, MBB has provided higher returns than GOVT over the past 8 years.
In this article, we’ll compare MBB vs. GOVT. We’ll look at fund composition and holdings, as well as at their performance and industry exposure. Moreover, I’ll also discuss MBB’s and GOVT’s portfolio growth, annual returns, and risk metrics and examine how these affect their overall returns.
|Name||iShares MBS ETF||iShares U.S. Treasury Bond ETF|
|Category||Intermediate Government||Intermediate Government|
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 U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.
MBB’s dividend yield is 0.88% higher than that of GOVT (1.88% vs. 1.0%). Also, MBB yielded on average 0.40% more per year over the past decade (3.08% vs. 2.67%). The expense ratio of MBB is 0.01 percentage points higher than GOVT’s (0.06% vs. 0.05%).
|MBB Bond Sectors||Weight|
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.
|GOVT Bond Sectors||Weight|
GOVT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 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.
The iShares MBS ETF (MBB) has a R-squared of 74.38 with a Beta of 0.6 and a Treynor Ratio of 3.02. 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 Alpha of 0.14.
The iShares U.S. Treasury Bond ETF (GOVT) has a Standard Deviation of 0 with a Sharpe Ratio of 0 and a Alpha of 0. Its Treynor Ratio is 0 while GOVT’s Mean Return is 0. Furthermore, the fund has a R-squared of 0 and a Beta of 0.
MBB’s Mean Return is 0.20 points higher than that of GOVT and its R-squared is 74.38 points higher. With a Standard Deviation of 2.12, MBB is slightly more volatile than GOVT. The Alpha and Beta of MBB are 0.14 points higher and 0.60 points higher than GOVT’s Alpha and Beta.
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 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in MBB would have resulted in a final balance of $12,185. This is a profit of $2,185 over 8 years and amounts to a compound annual growth rate (CAGR) of 3.08%.
With a $10,000 investment in GOVT, the end total would have been $12,297. This equates to a $2,297 profit over 8 years and a compound annual growth rate (CAGR) of 2.67%.
MBB’s CAGR is 0.40 percentage points higher than that of GOVT and as a result, would have yielded $112 less on a $10,000 investment. Thus, MBB outperformed GOVT by 0.40% annually.
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