MBB vs. IWS: What’s The Difference?

The iShares MBS ETF (MBB) and the iShares Russell Mid-Cap Value ETF (IWS) are both among the Top 100 ETFs. MBB is a iShares Intermediate Government fund and IWS is a iShares Mid-Cap Value fund. So, what’s the difference between MBB and IWS? And which fund is better?

The expense ratio of MBB is 0.17 percentage points lower than IWS’s (0.06% vs. 0.23%). MBB is mostly comprised of AAA bonds while IWS has a high exposure to the financial services sector. Overall, MBB has provided lower returns than IWS over the past 11 years.

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

Summary

MBB IWS
Name iShares MBS ETF iShares Russell Mid-Cap Value ETF
Category Intermediate Government Mid-Cap Value
Issuer iShares iShares
AUM 25.69B 14.24B
Avg. Return 3.08% 12.35%
Div. Yield 1.88% 1.34%
Expense Ratio 0.06% 0.23%

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 Russell Mid-Cap Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

MBB’s dividend yield is 0.54% higher than that of IWS (1.88% vs. 1.34%). Also, MBB yielded on average 9.27% less per year over the past decade (3.08% vs. 12.35%). The expense ratio of MBB is 0.17 percentage points lower than IWS’s (0.06% vs. 0.23%).

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.

IWS - Holdings

IWS Holdings Weight
Twitter Inc 0.69%
Marvell Technology Inc 0.69%
IHS Markit Ltd 0.62%
Prudential Financial Inc 0.56%
Otis Worldwide Corp Ordinary Shares 0.54%
International Flavors & Fragrances Inc 0.53%
Xcel Energy Inc 0.52%
Motorola Solutions Inc 0.52%
Aptiv PLC 0.52%
Aflac Inc 0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

Risk Analysis

MBB IWS
Mean Return 0.2 1.06
R-squared 74.38 87.04
Std. Deviation 2.12 16.03
Alpha 0.14 -4.11
Beta 0.6 1.1
Sharpe Ratio 0.87 0.75
Treynor Ratio 3.02 10.3

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

The iShares Russell Mid-Cap Value ETF (IWS) has a Standard Deviation of 16.03 with a Treynor Ratio of 10.3 and a R-squared of 87.04. Its Beta is 1.1 while IWS’s Alpha is -4.11. Furthermore, the fund has a Mean Return of 1.06 and a Sharpe Ratio of 0.75.

MBB’s Mean Return is 0.86 points lower than that of IWS and its R-squared is 12.66 points lower. With a Standard Deviation of 2.12, MBB is slightly less volatile than IWS. The Alpha and Beta of MBB are 4.25 points higher and 0.50 points lower than IWS’s Alpha and Beta.

Performance

Annual Returns

MBB vs. IWS - Annual Returns

Year MBB IWS
2020 4.03% 4.76%
2019 6.27% 26.78%
2018 0.81% -12.36%
2017 2.37% 13.1%
2016 1.28% 19.69%
2015 1.28% -4.93%
2014 6.16% 14.49%
2013 -1.92% 33.11%
2012 2.23% 18.27%
2011 5.88% -1.55%
2010 5.44% 24.46%

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 2013 was the strongest year for IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

MBB vs. IWS - Portfolio Growth

Fund Initial Balance Final Balance CAGR
MBB $10,000 $13,906 3.08%
IWS $10,000 $33,083 12.35%

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 IWS, the end total would have been $33,083. This equates to a $23,083 profit over 11 years and a compound annual growth rate (CAGR) of 12.35%.

MBB’s CAGR is 9.27 percentage points lower than that of IWS and as a result, would have yielded $19,177 less on a $10,000 investment. Thus, MBB performed worse than IWS by 9.27% annually.


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