MBB vs. VLUE: What’s The Difference?

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

The expense ratio of MBB is 0.09 percentage points lower than VLUE’s (0.06% vs. 0.15%). MBB is mostly comprised of AAA bonds while VLUE has a high exposure to the technology sector. Overall, MBB has provided lower returns than VLUE over the past 7 years.

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

Summary

MBB VLUE
Name iShares MBS ETF iShares MSCI USA Value Factor ETF
Category Intermediate Government Large Value
Issuer iShares iShares
AUM 25.69B 15.95B
Avg. Return 3.08% 8.91%
Div. Yield 1.88% 1.89%
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 Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.

MBB’s dividend yield is 0.01% lower than that of VLUE (1.88% vs. 1.89%). Also, MBB yielded on average 5.83% less per year over the past decade (3.08% vs. 8.91%). The expense ratio of MBB is 0.09 percentage points lower than VLUE’s (0.06% vs. 0.15%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

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.

VLUE - Holdings

VLUE Holdings Weight
AT&T Inc 7.13%
Intel Corp 6.14%
General Motors Co 3.19%
Micron Technology Inc 3.14%
Cisco Systems Inc 3.05%
International Business Machines Corp 2.76%
Target Corp 2.38%
Citigroup Inc 2.32%
Ford Motor Co 2.23%
Pfizer Inc 2.17%

VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.

International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

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

The iShares MSCI USA Value Factor ETF (VLUE) has a Standard Deviation of 0 with a R-squared of 0 and a Mean Return of 0. Its Beta is 0 while VLUE’s Alpha is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Treynor Ratio of 0.

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

BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Coinbase - the simplest and cheapest broker I've found! Click here to read more (link to Coinbase).

Performance

Annual Returns

MBB vs. VLUE - Annual Returns

Year MBB VLUE
2020 4.03% -0.32%
2019 6.27% 27.47%
2018 0.81% -11.18%
2017 2.37% 21.97%
2016 1.28% 15.68%
2015 1.28% -3.54%
2014 6.16% 12.29%
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 VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor 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. VLUE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
MBB $10,000 $12,423 3.08%
VLUE $10,000 $17,247 8.91%

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 VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.

MBB’s CAGR is 5.83 percentage points lower than that of VLUE and as a result, would have yielded $4,824 less on a $10,000 investment. Thus, MBB performed worse than VLUE by 5.83% 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 Coinbase. I've started allocating a small amount of assets to the growing crypto space and Coinbase has just been a breeze to use. Once you register, make sure to also open an Coinbase Pro account to buy crypto at the lowest fees on the market (just 0.1%!).

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

Leave a Reply