The iShares National Muni Bond ETF (MUB) and the iShares Preferred and Income Securities ETF (PFF) are both among the Top 100 ETFs. MUB is a iShares Muni National Interm fund and PFF is a iShares Preferred Stock fund. So, what’s the difference between MUB and PFF? And which fund is better?
The expense ratio of MUB is 0.39 percentage points lower than PFF’s (0.07% vs. 0.46%). MUB is mostly comprised of AA bonds while PFF has a high exposure to the utilities sector. Overall, MUB has provided lower returns than PFF over the past 11 years.
In this article, we’ll compare MUB vs. PFF. We’ll look at portfolio growth and annual returns, as well as at their performance and holdings. Moreover, I’ll also discuss MUB’s and PFF’s industry exposure, fund composition, and risk metrics and examine how these affect their overall returns.
Summary
| MUB | PFF | |
| Name | iShares National Muni Bond ETF | iShares Preferred and Income Securities ETF |
| Category | Muni National Interm | Preferred Stock |
| Issuer | iShares | iShares |
| AUM | 22.71B | 19.8B |
| Avg. Return | 4.04% | 6.90% |
| Div. Yield | 1.96% | 4.47% |
| Expense Ratio | 0.07% | 0.46% |
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 Preferred and Income Securities ETF (PFF) is a Preferred Stock fund that is issued by iShares. It currently has 19.8B total assets under management and has yielded an average annual return of 6.90% over the past 10 years. The fund has a dividend yield of 4.47% with an expense ratio of 0.46%.
MUB’s dividend yield is 2.51% lower than that of PFF (1.96% vs. 4.47%). Also, MUB yielded on average 2.86% less per year over the past decade (4.04% vs. 6.90%). The expense ratio of MUB is 0.39 percentage points lower than PFF’s (0.07% vs. 0.46%).
Fund Composition
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.
| PFF Holdings | Weight |
| Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A | 2.54% |
| BlackRock Cash Funds Treasury SL Agency | 2.3% |
| Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L- | 1.79% |
| Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L- | 1.49% |
| ArcelorMittal S.A. 5.5% | 1.36% |
| Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A | 1.35% |
| Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B | 1.14% |
| NextEra Energy Inc Unit | 1.12% |
| Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 | 1.08% |
| Avantor Inc Ser A | 0.99% |
PFF’s Top Holdings are Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A, BlackRock Cash Funds Treasury SL Agency, Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-, Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-, and ArcelorMittal S.A. 5.5% at 2.54%, 2.3%, 1.79%, 1.49%, and 1.36%.
Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A (1.35%), Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B (1.14%), and NextEra Energy Inc Unit (1.12%) have a slightly smaller but still significant weight. Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 and Avantor Inc Ser A are also represented in the PFF’s holdings at 1.08% and 0.99%.
Risk Analysis
| MUB | PFF | |
| Mean Return | 0.32 | 0.52 |
| R-squared | 99 | 9.39 |
| Std. Deviation | 3.68 | 7.87 |
| Alpha | -0.46 | 3.45 |
| Beta | 1.01 | 0.81 |
| Sharpe Ratio | 0.88 | 0.72 |
| Treynor Ratio | 3.2 | 6.79 |
The iShares National Muni Bond ETF (MUB) has a Standard Deviation of 3.68 with a Treynor Ratio of 3.2 and a R-squared of 99. Its Beta is 1.01 while MUB’s Alpha is -0.46. Furthermore, the fund has a Mean Return of 0.32 and a Sharpe Ratio of 0.88.
The iShares Preferred and Income Securities ETF (PFF) has a Sharpe Ratio of 0.72 with a Standard Deviation of 7.87 and a R-squared of 9.39. Its Beta is 0.81 while PFF’s Treynor Ratio is 6.79. Furthermore, the fund has a Alpha of 3.45 and a Mean Return of 0.52.
MUB’s Mean Return is 0.20 points lower than that of PFF and its R-squared is 89.61 points higher. With a Standard Deviation of 3.68, MUB is slightly less volatile than PFF. The Alpha and Beta of MUB are 3.91 points lower and 0.20 points higher than PFF’s Alpha and Beta.
Performance
Annual Returns
| Year | MUB | PFF |
| 2020 | 4.87% | 7.94% |
| 2019 | 7.28% | 15.62% |
| 2018 | 0.86% | -4.77% |
| 2017 | 4.61% | 8.33% |
| 2016 | 0.06% | 1.26% |
| 2015 | 2.99% | 4.62% |
| 2014 | 8.61% | 13.45% |
| 2013 | -3.26% | -0.59% |
| 2012 | 6.14% | 18.25% |
| 2011 | 10.85% | -2.2% |
| 2010 | 1.4% | 13.96% |
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 2012 was the strongest year for PFF, returning 18.25% on an annual basis. The poorest year for PFF in the last ten years was 2018, with a yield of -4.77%. Most years the iShares Preferred and Income Securities ETF has given investors modest returns, such as in 2015, 2020, and 2017, when gains were 4.62%, 7.94%, and 8.33% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| MUB | $10,000 | $15,333 | 4.04% |
| PFF | $10,000 | $20,272 | 6.90% |
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 PFF, the end total would have been $20,272. This equates to a $10,272 profit over 11 years and a compound annual growth rate (CAGR) of 6.90%.
MUB’s CAGR is 2.86 percentage points lower than that of PFF and as a result, would have yielded $4,939 less on a $10,000 investment. Thus, MUB performed worse than PFF by 2.86% annually.
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