MUB vs. IWN: What’s The Difference?

The iShares National Muni Bond ETF (MUB) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. MUB is a iShares Muni National Interm fund and IWN is a iShares Small Value fund. So, what’s the difference between MUB and IWN? And which fund is better?

The expense ratio of MUB is 0.17 percentage points lower than IWN’s (0.07% vs. 0.24%). MUB is mostly comprised of AA bonds while IWN has a high exposure to the financial services sector. Overall, MUB has provided lower returns than IWN over the past 11 years.

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

Summary

MUB IWN
Name iShares National Muni Bond ETF iShares Russell 2000 Value ETF
Category Muni National Interm Small Value
Issuer iShares iShares
AUM 22.71B 15.48B
Avg. Return 4.04% 10.96%
Div. Yield 1.96% 1.26%
Expense Ratio 0.07% 0.24%

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 Russell 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.

MUB’s dividend yield is 0.70% higher than that of IWN (1.96% vs. 1.26%). Also, MUB yielded on average 6.92% less per year over the past decade (4.04% vs. 10.96%). The expense ratio of MUB is 0.17 percentage points lower than IWN’s (0.07% vs. 0.24%).

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.

IWN - Holdings

IWN Holdings Weight
AMC Entertainment Holdings Inc Class A 1.06%
Tenet Healthcare Corp 0.47%
Stag Industrial Inc 0.47%
Ovintiv Inc 0.45%
EMCOR Group Inc 0.42%
Valley National Bancorp 0.37%
Chesapeake Energy Corp Ordinary Shares – New 0.37%
Agree Realty Corp 0.36%
Macy’s Inc 0.35%
Essent Group Ltd 0.35%

IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.

Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.

Risk Analysis

MUB IWN
Mean Return 0.32 1.01
R-squared 99 72.64
Std. Deviation 3.68 19.28
Alpha -0.46 -6.32
Beta 1.01 1.21
Sharpe Ratio 0.88 0.59
Treynor Ratio 3.2 8.3

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

The iShares Russell 2000 Value ETF (IWN) has a R-squared of 72.64 with a Alpha of -6.32 and a Beta of 1.21. Its Sharpe Ratio is 0.59 while IWN’s Treynor Ratio is 8.3. Furthermore, the fund has a Standard Deviation of 19.28 and a Mean Return of 1.01.

MUB’s Mean Return is 0.69 points lower than that of IWN and its R-squared is 26.36 points higher. With a Standard Deviation of 3.68, MUB is slightly less volatile than IWN. The Alpha and Beta of MUB are 5.86 points higher and 0.20 points lower than IWN’s Alpha and Beta.

Performance

Annual Returns

MUB vs. IWN - Annual Returns

Year MUB IWN
2020 4.87% 4.5%
2019 7.28% 22.17%
2018 0.86% -12.94%
2017 4.61% 7.73%
2016 0.06% 31.64%
2015 2.99% -7.53%
2014 8.61% 4.13%
2013 -3.26% 34.3%
2012 6.14% 17.92%
2011 10.85% -5.64%
2010 1.4% 24.29%

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 2013 was the strongest year for IWN, returning 34.3% on an annual basis. The poorest year for IWN in the last ten years was 2018, with a yield of -12.94%. Most years the iShares Russell 2000 Value ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 4.5%, 7.73%, and 17.92% respectively.

Portfolio Growth

MUB vs. IWN - Portfolio Growth

Fund Initial Balance Final Balance CAGR
MUB $10,000 $15,333 4.04%
IWN $10,000 $28,189 10.96%

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 IWN, the end total would have been $28,189. This equates to a $18,189 profit over 11 years and a compound annual growth rate (CAGR) of 10.96%.

MUB’s CAGR is 6.92 percentage points lower than that of IWN and as a result, would have yielded $12,856 less on a $10,000 investment. Thus, MUB performed worse than IWN by 6.92% annually.


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