The iShares MBS ETF (MBB) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. MBB is a iShares Intermediate Government fund and MTUM is a iShares Large Growth fund. So, what’s the difference between MBB and MTUM? And which fund is better?
The expense ratio of MBB is 0.09 percentage points lower than MTUM’s (0.06% vs. 0.15%). MBB is mostly comprised of AAA bonds while MTUM has a high exposure to the financial services sector. Overall, MBB has provided lower returns than MTUM over the past 7 years.
In this article, we’ll compare MBB vs. MTUM. We’ll look at risk metrics and performance, as well as at their portfolio growth and fund composition. Moreover, I’ll also discuss MBB’s and MTUM’s holdings, annual returns, and industry exposure and examine how these affect their overall returns.
Summary
| MBB | MTUM | |
| Name | iShares MBS ETF | iShares MSCI USA Momentum Factor ETF |
| Category | Intermediate Government | Large Growth |
| Issuer | iShares | iShares |
| AUM | 25.69B | 14.53B |
| Avg. Return | 3.08% | 17.37% |
| Div. Yield | 1.88% | 0.44% |
| Expense Ratio | 0.06% | 0.15% |
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 USA Momentum Factor ETF (MTUM) is a Large Growth fund that is issued by iShares. It currently has 14.53B total assets under management and has yielded an average annual return of 17.37% over the past 10 years. The fund has a dividend yield of 0.44% with an expense ratio of 0.15%.
MBB’s dividend yield is 1.44% higher than that of MTUM (1.88% vs. 0.44%). Also, MBB yielded on average 14.29% less per year over the past decade (3.08% vs. 17.37%). The expense ratio of MBB is 0.09 percentage points lower than MTUM’s (0.06% vs. 0.15%).
Fund Composition
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.
| MTUM Holdings | Weight |
| Tesla Inc | 5.63% |
| The Walt Disney Co | 4.39% |
| JPMorgan Chase & Co | 4.35% |
| Berkshire Hathaway Inc Class B | 4.34% |
| Bank of America Corp | 3.81% |
| PayPal Holdings Inc | 3.76% |
| Wells Fargo & Co | 3.05% |
| Applied Materials Inc | 3.05% |
| Moderna Inc | 2.89% |
| Alphabet Inc Class C | 2.84% |
MTUM’s Top Holdings are Tesla Inc, The Walt Disney Co, JPMorgan Chase & Co, Berkshire Hathaway Inc Class B, and Bank of America Corp at 5.63%, 4.39%, 4.35%, 4.34%, and 3.81%.
PayPal Holdings Inc (3.76%), Wells Fargo & Co (3.05%), and Applied Materials Inc (3.05%) have a slightly smaller but still significant weight. Moderna Inc and Alphabet Inc Class C are also represented in the MTUM’s holdings at 2.89% and 2.84%.
Risk Analysis
| MBB | MTUM | |
| 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 R-squared of 74.38 with a Sharpe Ratio of 0.87 and a Beta of 0.6. Its Treynor Ratio is 3.02 while MBB’s Standard Deviation is 2.12. Furthermore, the fund has a Mean Return of 0.2 and a Alpha of 0.14.
The iShares MSCI USA Momentum Factor ETF (MTUM) has a Beta of 0 with a Alpha of 0 and a Standard Deviation of 0. Its Sharpe Ratio is 0 while MTUM’s Mean Return 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 MTUM and its R-squared is 74.38 points higher. With a Standard Deviation of 2.12, MBB is slightly more volatile than MTUM. The Alpha and Beta of MBB are 0.14 points higher and 0.60 points higher than MTUM’s Alpha and Beta.
Performance
Annual Returns
| Year | MBB | MTUM |
| 2020 | 4.03% | 29.69% |
| 2019 | 6.27% | 27.57% |
| 2018 | 0.81% | -1.77% |
| 2017 | 2.37% | 37.6% |
| 2016 | 1.28% | 4.89% |
| 2015 | 1.28% | 9.12% |
| 2014 | 6.16% | 14.48% |
| 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 2017 was the strongest year for MTUM, returning 37.6% on an annual basis. The poorest year for MTUM in the last ten years was 2018, with a yield of -1.77%. Most years the iShares MSCI USA Momentum Factor ETF has given investors modest returns, such as in 2010, 2016, and 2015, when gains were 0.0%, 4.89%, and 9.12% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| MBB | $10,000 | $12,423 | 3.08% |
| MTUM | $10,000 | $29,301 | 17.37% |
A $10,000 investment in MBB would have resulted in a final balance of $12,423. This is a profit of $2,423 over 7 years and amounts to a compound annual growth rate (CAGR) of 3.08%.
With a $10,000 investment in MTUM, the end total would have been $29,301. This equates to a $19,301 profit over 7 years and a compound annual growth rate (CAGR) of 17.37%.
MBB’s CAGR is 14.29 percentage points lower than that of MTUM and as a result, would have yielded $16,878 less on a $10,000 investment. Thus, MBB performed worse than MTUM by 14.29% 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)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) 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!
3) 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!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
