The iShares MBS ETF (MBB) and the Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) are both among the Top 100 ETFs. MBB is a iShares Intermediate Government fund and VOE is a Vanguard Mid-Cap Value fund. So, what’s the difference between MBB and VOE? And which fund is better?
The expense ratio of MBB is 0.01 percentage points lower than VOE’s (0.06% vs. 0.07%). MBB is mostly comprised of AAA bonds while VOE has a high exposure to the financial services sector. Overall, MBB has provided lower returns than VOE over the past 11 years.
In this article, we’ll compare MBB vs. VOE. We’ll look at risk metrics and fund composition, as well as at their portfolio growth and industry exposure. Moreover, I’ll also discuss MBB’s and VOE’s annual returns, performance, and holdings and examine how these affect their overall returns.
|Name||iShares MBS ETF||Vanguard Mid-Cap Value Index Fund ETF Shares|
|Category||Intermediate Government||Mid-Cap Value|
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 Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) is a Mid-Cap Value fund that is issued by Vanguard. It currently has 26.78B total assets under management and has yielded an average annual return of 12.52% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.07%.
MBB’s dividend yield is 0.01% higher than that of VOE (1.88% vs. 1.87%). Also, MBB yielded on average 9.45% less per year over the past decade (3.08% vs. 12.52%). The expense ratio of MBB is 0.01 percentage points lower than VOE’s (0.06% vs. 0.07%).
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|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.
|Carrier Global Corp Ordinary Shares||1.28%|
|International Flavors & Fragrances Inc||1.13%|
|Motorola Solutions Inc||1.12%|
|Discover Financial Services||1.09%|
|Valero Energy Corp||0.97%|
|Willis Towers Watson PLC||0.9%|
|D.R. Horton Inc||0.89%|
VOE’s Top Holdings are Carrier Global Corp Ordinary Shares, International Flavors & Fragrances Inc, Motorola Solutions Inc, Discover Financial Services, and Welltower Inc at 1.28%, 1.13%, 1.12%, 1.09%, and 1.05%.
Corteva Inc (0.99%), Valero Energy Corp (0.97%), and Corning Inc (0.95%) have a slightly smaller but still significant weight. Willis Towers Watson PLC and D.R. Horton Inc are also represented in the VOE’s holdings at 0.9% and 0.89%.
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The iShares MBS ETF (MBB) has a Standard Deviation of 2.12 with a Alpha of 0.14 and a Treynor Ratio of 3.02. Its Beta is 0.6 while MBB’s Sharpe Ratio is 0.87. Furthermore, the fund has a Mean Return of 0.2 and a R-squared of 74.38.
The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a Sharpe Ratio of 0.75 with a R-squared of 88.76 and a Standard Deviation of 15.98. Its Alpha is -3.77 while VOE’s Treynor Ratio is 10.19. Furthermore, the fund has a Mean Return of 1.05 and a Beta of 1.11.
MBB’s Mean Return is 0.85 points lower than that of VOE and its R-squared is 14.38 points lower. With a Standard Deviation of 2.12, MBB is slightly less volatile than VOE. The Alpha and Beta of MBB are 3.91 points higher and 0.51 points lower than VOE’s Alpha and Beta.
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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 VOE, returning 37.65% on an annual basis. The poorest year for VOE in the last ten years was 2018, with a yield of -12.41%. Most years the Vanguard Mid-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 13.98%, 15.26%, and 16.04% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 VOE, the end total would have been $33,655. This equates to a $23,655 profit over 11 years and a compound annual growth rate (CAGR) of 12.52%.
MBB’s CAGR is 9.45 percentage points lower than that of VOE and as a result, would have yielded $19,749 less on a $10,000 investment. Thus, MBB performed worse than VOE by 9.45% annually.
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