The iShares MSCI USA Momentum Factor ETF (MTUM) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. MTUM is a iShares Large Growth fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between MTUM and GOVT? And which fund is better?
The expense ratio of MTUM is 0.10 percentage points higher than GOVT’s (0.15% vs. 0.05%). MTUM also has a high exposure to the financial services sector while GOVT is mostly comprised of AAA bonds. Overall, MTUM has provided higher returns than GOVT over the past 7 years.
In this article, we’ll compare MTUM vs. GOVT. We’ll look at risk metrics and performance, as well as at their holdings and industry exposure. Moreover, I’ll also discuss MTUM’s and GOVT’s fund composition, annual returns, and portfolio growth and examine how these affect their overall returns.
|Name||iShares MSCI USA Momentum Factor ETF||iShares U.S. Treasury Bond ETF|
|Category||Large Growth||Intermediate Government|
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 iShares U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.
MTUM’s dividend yield is 0.56% lower than that of GOVT (0.44% vs. 1.0%). Also, MTUM yielded on average 14.69% more per year over the past decade (17.37% vs. 2.67%). The expense ratio of MTUM is 0.10 percentage points higher than GOVT’s (0.15% vs. 0.05%).
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|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%|
|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%.
|GOVT Bond Sectors||Weight|
GOVT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 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.
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The iShares MSCI USA Momentum Factor ETF (MTUM) has a R-squared of 0 with a Mean Return of 0 and a Beta of 0. Its Standard Deviation is 0 while MTUM’s Alpha is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Treynor Ratio of 0.
The iShares U.S. Treasury Bond ETF (GOVT) has a Treynor Ratio of 0 with a R-squared of 0 and a Beta of 0. Its Sharpe Ratio is 0 while GOVT’s Mean Return is 0. Furthermore, the fund has a Alpha of 0 and a Standard Deviation of 0.
MTUM’s Mean Return is 0.00 points lower than that of GOVT and its R-squared is 0.00 points lower. With a Standard Deviation of 0, MTUM is slightly less volatile than GOVT. The Alpha and Beta of MTUM are 0.00 points lower and 0.00 points lower than GOVT’s Alpha and Beta.
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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 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 GOVT, the end total would have been $12,656. This equates to a $2,656 profit over 7 years and a compound annual growth rate (CAGR) of 2.67%.
MTUM’s CAGR is 14.69 percentage points higher than that of GOVT and as a result, would have yielded $16,645 more on a $10,000 investment. Thus, MTUM outperformed GOVT by 14.69% annually.
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