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MTUM vs. BIV: What’s The Difference?

The iShares MSCI USA Momentum Factor ETF (MTUM) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. MTUM is a iShares Large Growth fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between MTUM and BIV? And which fund is better?

The expense ratio of MTUM is 0.10 percentage points higher than BIV’s (0.15% vs. 0.05%). MTUM also has a high exposure to the financial services sector while BIV is mostly comprised of AAA bonds. Overall, MTUM has provided higher returns than BIV over the past 7 years.

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

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Summary

MTUMBIV
NameiShares MSCI USA Momentum Factor ETFVanguard Intermediate-Term Bond Index Fund ETF Shares
CategoryLarge GrowthIntermediate-Term Bond
IssueriSharesVanguard
AUM14.53B39.05B
Avg. Return17.37%5.31%
Div. Yield0.44%2.06%
Expense Ratio0.15%0.05%

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%.

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.

MTUM’s dividend yield is 1.62% lower than that of BIV (0.44% vs. 2.06%). Also, MTUM yielded on average 12.05% more per year over the past decade (17.37% vs. 5.31%). The expense ratio of MTUM is 0.10 percentage points higher than BIV’s (0.15% vs. 0.05%).

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Fund Composition

Holdings

MTUM - Holdings

MTUM HoldingsWeight
Tesla Inc5.63%
The Walt Disney Co4.39%
JPMorgan Chase & Co4.35%
Berkshire Hathaway Inc Class B4.34%
Bank of America Corp3.81%
PayPal Holdings Inc3.76%
Wells Fargo & Co3.05%
Applied Materials Inc3.05%
Moderna Inc2.89%
Alphabet Inc Class C2.84%

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%.

BIV - Holdings

BIV Bond SectorsWeight
AAA54.51%
BBB25.24%
A16.97%
AA3.1%
Others0.15%
Below B0.03%
B0.0%
BB0.0%
US Government0.0%

BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.

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Risk Analysis

MTUMBIV
Mean Return00.35
R-squared095.12
Std. Deviation04.09
Alpha0-0.07
Beta01.33
Sharpe Ratio00.89
Treynor Ratio02.72

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

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a R-squared of 95.12 with a Treynor Ratio of 2.72 and a Sharpe Ratio of 0.89. Its Mean Return is 0.35 while BIV’s Standard Deviation is 4.09. Furthermore, the fund has a Alpha of -0.07 and a Beta of 1.33.

MTUM’s Mean Return is 0.35 points lower than that of BIV and its R-squared is 95.12 points lower. With a Standard Deviation of 0, MTUM is slightly less volatile than BIV. The Alpha and Beta of MTUM are 0.07 points higher and 1.33 points lower than BIV’s Alpha and Beta.

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Performance

Annual Returns

MTUM vs. BIV - Annual Returns

YearMTUMBIV
202029.69%9.71%
201927.57%10.19%
2018-1.77%-0.09%
201737.6%3.8%
20164.89%2.86%
20159.12%1.23%
201414.48%7.0%
20130.0%-3.44%
20120.0%7.02%
20110.0%10.62%
20100.0%9.55%

MTUM had its best year in 2017 with an annual return of 37.6%. MTUM’s worst year over the past decade yielded -1.77% and occurred in 2018. In most years the iShares MSCI USA Momentum Factor ETF provided moderate returns such as in 2010, 2016, and 2015 where annual returns amounted to 0.0%, 4.89%, and 9.12% respectively.

The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.

Portfolio Growth

MTUM vs. BIV - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
MTUM$10,000$29,30117.37%
BIV$10,000$13,9685.31%

A $10,000 investment in MTUM would have resulted in a final balance of $29,301. This is a profit of $19,301 over 7 years and amounts to a compound annual growth rate (CAGR) of 17.37%.

With a $10,000 investment in BIV, the end total would have been $13,968. This equates to a $3,968 profit over 7 years and a compound annual growth rate (CAGR) of 5.31%.

MTUM’s CAGR is 12.05 percentage points higher than that of BIV and as a result, would have yielded $15,333 more on a $10,000 investment. Thus, MTUM outperformed BIV by 12.05% annually.


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