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MTUM vs. GOVT: What’s The Difference?

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.

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Summary

MTUMGOVT
NameiShares MSCI USA Momentum Factor ETFiShares U.S. Treasury Bond ETF
CategoryLarge GrowthIntermediate Government
IssueriSharesiShares
AUM14.53B17.07B
Avg. Return17.37%2.67%
Div. Yield0.44%1.0%
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 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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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%.

GOVT - Holdings

GOVT Bond SectorsWeight
AAA100.0%
Others0.0%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

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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Risk Analysis

MTUMGOVT
Mean Return00
R-squared00
Std. Deviation00
Alpha00
Beta00
Sharpe Ratio00
Treynor Ratio00

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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Performance

Annual Returns

MTUM vs. GOVT - Annual Returns

YearMTUMGOVT
202029.69%7.92%
201927.57%6.71%
2018-1.77%0.74%
201737.6%2.19%
20164.89%0.92%
20159.12%0.76%
201414.48%4.99%
20130.0%-2.84%
20120.0%0.0%
20110.0%0.0%
20100.0%0.0%

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.

Portfolio Growth

MTUM vs. GOVT - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
MTUM$10,000$29,30117.37%
GOVT$10,000$12,6562.67%

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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