PFF vs. MTUM: What’s The Difference?

The iShares Preferred and Income Securities ETF (PFF) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. PFF is a iShares Preferred Stock fund and MTUM is a iShares Large Growth fund. So, what’s the difference between PFF and MTUM? And which fund is better?

The expense ratio of PFF is 0.31 percentage points higher than MTUM’s (0.46% vs. 0.15%). PFF also has a higher exposure to the utilities sector and a higher standard deviation. Overall, PFF has provided lower returns than MTUM over the past 7 years.

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

Summary

PFF MTUM
Name iShares Preferred and Income Securities ETF iShares MSCI USA Momentum Factor ETF
Category Preferred Stock Large Growth
Issuer iShares iShares
AUM 19.8B 14.53B
Avg. Return 6.90% 17.37%
Div. Yield 4.47% 0.44%
Expense Ratio 0.46% 0.15%

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%.

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%.

PFF’s dividend yield is 4.03% higher than that of MTUM (4.47% vs. 0.44%). Also, PFF yielded on average 10.47% less per year over the past decade (6.90% vs. 17.37%). The expense ratio of PFF is 0.31 percentage points higher than MTUM’s (0.46% vs. 0.15%).

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Fund Composition

Industry Exposure

PFF vs. MTUM - Industry Exposure

PFF MTUM
Technology 0.0% 15.24%
Industrials 10.27% 12.47%
Energy 0.0% 1.77%
Communication Services 0.0% 13.18%
Utilities 81.81% 0.19%
Healthcare 3.54% 6.41%
Consumer Defensive 0.0% 2.88%
Real Estate 0.65% 0.43%
Financial Services 0.0% 34.32%
Consumer Cyclical 0.0% 9.96%
Basic Materials 3.74% 3.15%

The iShares Preferred and Income Securities ETF (PFF) has the most exposure to the Utilities sector at 81.81%. This is followed by Industrials and Basic Materials at 10.27% and 3.74% respectively. Financial Services (0.0%), Consumer Defensive (0.0%), and Communication Services (0.0%) only make up 0.00% of the fund’s total assets.

PFF’s mid-section with moderate exposure is comprised of Energy, Technology, Real Estate, Healthcare, and Basic Materials stocks at 0.0%, 0.0%, 0.65%, 3.54%, and 3.74%.

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%.

PFF is 81.62% more exposed to the Utilities sector than MTUM (81.81% vs 0.19%). PFF’s exposure to Industrials and Basic Materials stocks is 2.20% lower and 0.59% higher respectively (10.27% vs. 12.47% and 3.74% vs. 3.15%). In total, Financial Services, Consumer Defensive, and Communication Services also make up 50.38% less of the fund’s holdings compared to MTUM (0.00% vs. 50.38%).

Holdings

PFF - Holdings

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%.

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

PFF MTUM
Mean Return 0.52 0
R-squared 9.39 0
Std. Deviation 7.87 0
Alpha 3.45 0
Beta 0.81 0
Sharpe Ratio 0.72 0
Treynor Ratio 6.79 0

The iShares Preferred and Income Securities ETF (PFF) has a Sharpe Ratio of 0.72 with a Mean Return of 0.52 and a Beta of 0.81. Its Treynor Ratio is 6.79 while PFF’s Alpha is 3.45. Furthermore, the fund has a R-squared of 9.39 and a Standard Deviation of 7.87.

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

PFF’s Mean Return is 0.52 points higher than that of MTUM and its R-squared is 9.39 points higher. With a Standard Deviation of 7.87, PFF is slightly more volatile than MTUM. The Alpha and Beta of PFF are 3.45 points higher and 0.81 points higher than MTUM’s Alpha and Beta.

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Performance

Annual Returns

PFF vs. MTUM - Annual Returns

Year PFF MTUM
2020 7.94% 29.69%
2019 15.62% 27.57%
2018 -4.77% -1.77%
2017 8.33% 37.6%
2016 1.26% 4.89%
2015 4.62% 9.12%
2014 13.45% 14.48%
2013 -0.59% 0.0%
2012 18.25% 0.0%
2011 -2.2% 0.0%
2010 13.96% 0.0%

PFF had its best year in 2012 with an annual return of 18.25%. PFF’s worst year over the past decade yielded -4.77% and occurred in 2018. In most years the iShares Preferred and Income Securities ETF provided moderate returns such as in 2015, 2020, and 2017 where annual returns amounted to 4.62%, 7.94%, and 8.33% 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

PFF vs. MTUM - Portfolio Growth

Fund Initial Balance Final Balance CAGR
PFF $10,000 $15,473 6.90%
MTUM $10,000 $29,301 17.37%

A $10,000 investment in PFF would have resulted in a final balance of $15,473. This is a profit of $5,473 over 7 years and amounts to a compound annual growth rate (CAGR) of 6.90%.

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%.

PFF’s CAGR is 10.47 percentage points lower than that of MTUM and as a result, would have yielded $13,828 less on a $10,000 investment. Thus, PFF performed worse than MTUM by 10.47% annually.


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