MUB vs. MTUM: What’s The Difference?

The iShares National Muni Bond ETF (MUB) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. MUB is a iShares Muni National Interm fund and MTUM is a iShares Large Growth fund. So, what’s the difference between MUB and MTUM? And which fund is better?

The expense ratio of MUB is 0.08 percentage points lower than MTUM’s (0.07% vs. 0.15%). MUB is mostly comprised of AA bonds while MTUM has a high exposure to the financial services sector. Overall, MUB has provided lower returns than MTUM over the past 7 years.

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

Summary

MUB MTUM
Name iShares National Muni Bond ETF iShares MSCI USA Momentum Factor ETF
Category Muni National Interm Large Growth
Issuer iShares iShares
AUM 22.71B 14.53B
Avg. Return 4.04% 17.37%
Div. Yield 1.96% 0.44%
Expense Ratio 0.07% 0.15%

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 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%.

MUB’s dividend yield is 1.52% higher than that of MTUM (1.96% vs. 0.44%). Also, MUB yielded on average 13.33% less per year over the past decade (4.04% vs. 17.37%). The expense ratio of MUB is 0.08 percentage points lower than MTUM’s (0.07% vs. 0.15%).

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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.

MTUM - Holdings

MTUM Holdings Weight
Tesla Inc 5.63%
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%
Moderna Inc 2.89%
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%.

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Risk Analysis

MUB MTUM
Mean Return 0.32 0
R-squared 99 0
Std. Deviation 3.68 0
Alpha -0.46 0
Beta 1.01 0
Sharpe Ratio 0.88 0
Treynor Ratio 3.2 0

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

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

MUB’s Mean Return is 0.32 points higher than that of MTUM and its R-squared is 99.00 points higher. With a Standard Deviation of 3.68, MUB is slightly more volatile than MTUM. The Alpha and Beta of MUB are 0.46 points lower and 1.01 points higher than MTUM’s Alpha and Beta.

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Performance

Annual Returns

MUB vs. MTUM - Annual Returns

Year MUB MTUM
2020 4.87% 29.69%
2019 7.28% 27.57%
2018 0.86% -1.77%
2017 4.61% 37.6%
2016 0.06% 4.89%
2015 2.99% 9.12%
2014 8.61% 14.48%
2013 -3.26% 0.0%
2012 6.14% 0.0%
2011 10.85% 0.0%
2010 1.4% 0.0%

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 2017 was the strongest year for MTUM, returning 37.6% on an annual basis. The poorest year for MTUM in the last ten years was 2018, with a yield of -1.77%. Most years the iShares MSCI USA Momentum Factor ETF has given investors modest returns, such as in 2010, 2016, and 2015, when gains were 0.0%, 4.89%, and 9.12% respectively.

Portfolio Growth

MUB vs. MTUM - Portfolio Growth

Fund Initial Balance Final Balance CAGR
MUB $10,000 $13,285 4.04%
MTUM $10,000 $29,301 17.37%

A $10,000 investment in MUB would have resulted in a final balance of $13,285. This is a profit of $3,285 over 7 years and amounts to a compound annual growth rate (CAGR) of 4.04%.

With a $10,000 investment in MTUM, the end total would have been $29,301. This equates to a $19,301 profit over 7 years and a compound annual growth rate (CAGR) of 17.37%.

MUB’s CAGR is 13.33 percentage points lower than that of MTUM and as a result, would have yielded $16,016 less on a $10,000 investment. Thus, MUB performed worse than MTUM by 13.33% annually.


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