MUB vs. ACWI: What’s The Difference?

The iShares National Muni Bond ETF (MUB) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. MUB is a iShares Muni National Interm fund and ACWI is a iShares N/A fund. So, what’s the difference between MUB and ACWI? And which fund is better?

The expense ratio of MUB is 0.25 percentage points lower than ACWI’s (0.07% vs. 0.32%). MUB is mostly comprised of AA bonds while ACWI has a high exposure to the technology sector. Overall, MUB has provided lower returns than ACWI over the past 11 years.

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

Summary

MUB ACWI
Name iShares National Muni Bond ETF iShares MSCI ACWI ETF
Category Muni National Interm N/A
Issuer iShares iShares
AUM 22.71B 16.85B
Avg. Return 4.04% 10.21%
Div. Yield 1.96% 1.39%
Expense Ratio 0.07% 0.32%

The iShares National Muni Bond ETF (MUB) is a Muni National Interm fund that is issued by iShares. It currently has 22.71B total assets under management and has yielded an average annual return of 4.04% over the past 10 years. The fund has a dividend yield of 1.96% with an expense ratio of 0.07%.

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

MUB’s dividend yield is 0.57% higher than that of ACWI (1.96% vs. 1.39%). Also, MUB yielded on average 6.18% less per year over the past decade (4.04% vs. 10.21%). The expense ratio of MUB is 0.25 percentage points lower than ACWI’s (0.07% vs. 0.32%).

Fund Composition

Holdings

MUB - Holdings

MUB Bond Sectors Weight
AA 60.38%
AAA 18.39%
A 15.04%
BBB 6.0%
Others 0.17%
BB 0.02%
Below B 0.0%
B 0.0%
US Government 0.0%

MUB’s Top Bond Sectors are ratings of AA, AAA, A, BBB, and Others at 60.38%, 18.39%, 15.04%, 6.0%, and 0.17%. The fund is less weighted towards BB (0.02%), Below B (0.0%), and B (0.0%) rated bonds.

ACWI - Holdings

ACWI Holdings Weight
Apple Inc 3.44%
Microsoft Corp 2.91%
Amazon.com Inc 2.21%
Facebook Inc A 1.25%
Alphabet Inc Class C 1.12%
Alphabet Inc A 1.09%
Taiwan Semiconductor Manufacturing Co Ltd 0.79%
Tesla Inc 0.78%
NVIDIA Corp 0.74%
JPMorgan Chase & Co 0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

Risk Analysis

MUB ACWI
Mean Return 0.32 0.89
R-squared 99 99.96
Std. Deviation 3.68 14.05
Alpha -0.46 0.15
Beta 1.01 1
Sharpe Ratio 0.88 0.71
Treynor Ratio 3.2 9.45

The iShares National Muni Bond ETF (MUB) has a R-squared of 99 with a Mean Return of 0.32 and a Sharpe Ratio of 0.88. Its Alpha is -0.46 while MUB’s Standard Deviation is 3.68. Furthermore, the fund has a Treynor Ratio of 3.2 and a Beta of 1.01.

The iShares MSCI ACWI ETF (ACWI) has a Alpha of 0.15 with a Mean Return of 0.89 and a R-squared of 99.96. Its Beta is 1 while ACWI’s Treynor Ratio is 9.45. Furthermore, the fund has a Sharpe Ratio of 0.71 and a Standard Deviation of 14.05.

MUB’s Mean Return is 0.57 points lower than that of ACWI and its R-squared is 0.96 points lower. With a Standard Deviation of 3.68, MUB is slightly less volatile than ACWI. The Alpha and Beta of MUB are 0.61 points lower and 0.01 points higher than ACWI’s Alpha and Beta.

Performance

Annual Returns

MUB vs. ACWI - Annual Returns

Year MUB ACWI
2020 4.87% 16.38%
2019 7.28% 26.7%
2018 0.86% -9.15%
2017 4.61% 24.35%
2016 0.06% 8.22%
2015 2.99% -2.39%
2014 8.61% 4.64%
2013 -3.26% 22.91%
2012 6.14% 15.99%
2011 10.85% -7.6%
2010 1.4% 12.31%

MUB had its best year in 2011 with an annual return of 10.85%. MUB’s worst year over the past decade yielded -3.26% and occurred in 2013. In most years the iShares National Muni Bond ETF provided moderate returns such as in 2015, 2017, and 2020 where annual returns amounted to 2.99%, 4.61%, and 4.87% respectively.

The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.

Portfolio Growth

MUB vs. ACWI - Portfolio Growth

Fund Initial Balance Final Balance CAGR
MUB $10,000 $15,333 4.04%
ACWI $10,000 $27,241 10.21%

A $10,000 investment in MUB would have resulted in a final balance of $15,333. This is a profit of $5,333 over 11 years and amounts to a compound annual growth rate (CAGR) of 4.04%.

With a $10,000 investment in ACWI, the end total would have been $27,241. This equates to a $17,241 profit over 11 years and a compound annual growth rate (CAGR) of 10.21%.

MUB’s CAGR is 6.18 percentage points lower than that of ACWI and as a result, would have yielded $11,908 less on a $10,000 investment. Thus, MUB performed worse than ACWI by 6.18% annually.


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