MBB vs. IVE: What’s The Difference?

The iShares MBS ETF (MBB) and the iShares S&P 500 Value ETF (IVE) are both among the Top 100 ETFs. MBB is a iShares Intermediate Government fund and IVE is a iShares Large Value fund. So, what’s the difference between MBB and IVE? And which fund is better?

The expense ratio of MBB is 0.12 percentage points lower than IVE’s (0.06% vs. 0.18%). MBB is mostly comprised of AAA bonds while IVE has a high exposure to the financial services sector. Overall, MBB has provided lower returns than IVE over the past 11 years.

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

Summary

MBB IVE
Name iShares MBS ETF iShares S&P 500 Value ETF
Category Intermediate Government Large Value
Issuer iShares iShares
AUM 25.69B 22.4B
Avg. Return 3.08% 11.68%
Div. Yield 1.88% 1.88%
Expense Ratio 0.06% 0.18%

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 S&P 500 Value ETF (IVE) is a Large Value fund that is issued by iShares. It currently has 22.4B total assets under management and has yielded an average annual return of 11.68% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.18%.

MBB’s dividend yield is 0.00% lower than that of IVE (1.88% vs. 1.88%). Also, MBB yielded on average 8.61% less per year over the past decade (3.08% vs. 11.68%). The expense ratio of MBB is 0.12 percentage points lower than IVE’s (0.06% vs. 0.18%).

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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.

IVE - Holdings

IVE Holdings Weight
Berkshire Hathaway Inc Class B 3.05%
JPMorgan Chase & Co 2.65%
The Walt Disney Co 1.85%
Bank of America Corp 1.67%
Johnson & Johnson 1.57%
Exxon Mobil Corp 1.41%
Pfizer Inc 1.38%
Cisco Systems Inc 1.35%
Verizon Communications Inc 1.33%
Intel Corp 1.25%

IVE’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, The Walt Disney Co, Bank of America Corp, and Johnson & Johnson at 3.05%, 2.65%, 1.85%, 1.67%, and 1.57%.

Exxon Mobil Corp (1.41%), Pfizer Inc (1.38%), and Cisco Systems Inc (1.35%) have a slightly smaller but still significant weight. Verizon Communications Inc and Intel Corp are also represented in the IVE’s holdings at 1.33% and 1.25%.

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Risk Analysis

MBB IVE
Mean Return 0.2 1.05
R-squared 74.38 92.08
Std. Deviation 2.12 14.3
Alpha 0.14 -2.9
Beta 0.6 1.01
Sharpe Ratio 0.87 0.83
Treynor Ratio 3.02 11.41

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

The iShares S&P 500 Value ETF (IVE) has a Treynor Ratio of 11.41 with a Alpha of -2.9 and a Mean Return of 1.05. Its Sharpe Ratio is 0.83 while IVE’s R-squared is 92.08. Furthermore, the fund has a Beta of 1.01 and a Standard Deviation of 14.3.

MBB’s Mean Return is 0.85 points lower than that of IVE and its R-squared is 17.70 points lower. With a Standard Deviation of 2.12, MBB is slightly less volatile than IVE. The Alpha and Beta of MBB are 3.04 points higher and 0.41 points lower than IVE’s Alpha and Beta.

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Performance

Annual Returns

MBB vs. IVE - Annual Returns

Year MBB IVE
2020 4.03% 1.24%
2019 6.27% 31.71%
2018 0.81% -9.09%
2017 2.37% 15.19%
2016 1.28% 17.17%
2015 1.28% -3.24%
2014 6.16% 12.14%
2013 -1.92% 31.69%
2012 2.23% 17.45%
2011 5.88% -0.63%
2010 5.44% 14.9%

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 IVE, returning 31.71% on an annual basis. The poorest year for IVE in the last ten years was 2018, with a yield of -9.09%. Most years the iShares S&P 500 Value ETF has given investors modest returns, such as in 2014, 2010, and 2017, when gains were 12.14%, 14.9%, and 15.19% respectively.

Portfolio Growth

MBB vs. IVE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
MBB $10,000 $13,906 3.08%
IVE $10,000 $31,350 11.68%

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 IVE, the end total would have been $31,350. This equates to a $21,350 profit over 11 years and a compound annual growth rate (CAGR) of 11.68%.

MBB’s CAGR is 8.61 percentage points lower than that of IVE and as a result, would have yielded $17,444 less on a $10,000 investment. Thus, MBB performed worse than IVE by 8.61% annually.


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