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MTUM vs. VHT: What’s The Difference?

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

The expense ratio of MTUM is 0.05 percentage points higher than VHT’s (0.15% vs. 0.1%). MTUM also has a higher exposure to the financial services sector and a lower standard deviation. Overall, MTUM has provided higher returns than VHT over the past 7 years.

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

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Summary

MTUMVHT
NameiShares MSCI USA Momentum Factor ETFVanguard Health Care Index Fund ETF Shares
CategoryLarge GrowthHealth
IssueriSharesVanguard
AUM14.53B17.94B
Avg. Return17.37%16.04%
Div. Yield0.44%1.15%
Expense Ratio0.15%0.1%

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 Health Care Index Fund ETF Shares (VHT) is a Health fund that is issued by Vanguard. It currently has 17.94B total assets under management and has yielded an average annual return of 16.04% over the past 10 years. The fund has a dividend yield of 1.15% with an expense ratio of 0.1%.

MTUM’s dividend yield is 0.71% lower than that of VHT (0.44% vs. 1.15%). Also, MTUM yielded on average 1.33% more per year over the past decade (17.37% vs. 16.04%). The expense ratio of MTUM is 0.05 percentage points higher than VHT’s (0.15% vs. 0.1%).

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Fund Composition

Industry Exposure

MTUM vs. VHT - Industry Exposure

MTUMVHT
Technology15.24%0.05%
Industrials12.47%0.05%
Energy1.77%0.0%
Communication Services13.18%0.0%
Utilities0.19%0.0%
Healthcare6.41%99.57%
Consumer Defensive2.88%0.0%
Real Estate0.43%0.0%
Financial Services34.32%0.02%
Consumer Cyclical9.96%0.0%
Basic Materials3.15%0.31%

The iShares MSCI USA Momentum Factor ETF (MTUM) has the most exposure to the Financial Services sector at 34.32%. This is followed by Technology and Communication Services at 15.24% and 13.18% respectively. Real Estate (0.43%), Energy (1.77%), and Consumer Defensive (2.88%) only make up 5.08% of the fund’s total assets.

MTUM’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Consumer Cyclical, Industrials, and Communication Services stocks at 3.15%, 6.41%, 9.96%, 12.47%, and 13.18%.

The Vanguard Health Care Index Fund ETF Shares (VHT) has the most exposure to the Healthcare sector at 99.57%. This is followed by Basic Materials and Technology at 0.31% and 0.05% respectively. Real Estate (0.0%), Consumer Defensive (0.0%), and Utilities (0.0%) only make up 0.00% of the fund’s total assets.

VHT’s mid-section with moderate exposure is comprised of Communication Services, Energy, Financial Services, Industrials, and Technology stocks at 0.0%, 0.0%, 0.02%, 0.05%, and 0.05%.

MTUM is 34.30% more exposed to the Financial Services sector than VHT (34.32% vs 0.02%). MTUM’s exposure to Technology and Communication Services stocks is 15.19% higher and 13.18% higher respectively (15.24% vs. 0.05% and 13.18% vs. 0.0%). In total, Real Estate, Energy, and Consumer Defensive also make up 5.08% more of the fund’s holdings compared to VHT (5.08% vs. 0.00%).

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%.

VHT - Holdings

VHT HoldingsWeight
Johnson & Johnson7.34%
UnitedHealth Group Inc6.44%
Pfizer Inc3.7%
Abbott Laboratories3.48%
Thermo Fisher Scientific Inc3.37%
AbbVie Inc3.37%
Merck & Co Inc3.33%
Eli Lilly and Co3.17%
Danaher Corp2.91%
Medtronic PLC2.83%

VHT’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and Thermo Fisher Scientific Inc at 7.34%, 6.44%, 3.7%, 3.48%, and 3.37%.

AbbVie Inc (3.37%), Merck & Co Inc (3.33%), and Eli Lilly and Co (3.17%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the VHT’s holdings at 2.91% and 2.83%.

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Risk Analysis

MTUMVHT
Mean Return01.33
R-squared059.86
Std. Deviation013.58
Alpha07.99
Beta00.75
Sharpe Ratio01.13
Treynor Ratio020.74

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

The Vanguard Health Care Index Fund ETF Shares (VHT) has a R-squared of 59.86 with a Standard Deviation of 13.58 and a Mean Return of 1.33. Its Sharpe Ratio is 1.13 while VHT’s Alpha is 7.99. Furthermore, the fund has a Beta of 0.75 and a Treynor Ratio of 20.74.

MTUM’s Mean Return is 1.33 points lower than that of VHT and its R-squared is 59.86 points lower. With a Standard Deviation of 0, MTUM is slightly less volatile than VHT. The Alpha and Beta of MTUM are 7.99 points lower and 0.75 points lower than VHT’s Alpha and Beta.

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Performance

Annual Returns

MTUM vs. VHT - Annual Returns

YearMTUMVHT
202029.69%18.21%
201927.57%21.97%
2018-1.77%5.55%
201737.6%23.34%
20164.89%-3.33%
20159.12%7.22%
201414.48%25.38%
20130.0%42.67%
20120.0%19.1%
20110.0%10.57%
20100.0%5.75%

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 2013 was the strongest year for VHT, returning 42.67% on an annual basis. The poorest year for VHT in the last ten years was 2016, with a yield of -3.33%. Most years the Vanguard Health Care Index Fund ETF Shares has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 10.57%, 18.21%, and 19.1% respectively.

Portfolio Growth

MTUM vs. VHT - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
MTUM$10,000$29,30117.37%
VHT$10,000$24,39216.04%

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 VHT, the end total would have been $24,392. This equates to a $14,392 profit over 7 years and a compound annual growth rate (CAGR) of 16.04%.

MTUM’s CAGR is 1.33 percentage points higher than that of VHT and as a result, would have yielded $4,909 more on a $10,000 investment. Thus, MTUM outperformed VHT by 1.33% annually.


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