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QUAL vs. IUSB: What’s The Difference?

The iShares MSCI USA Quality Factor ETF (QUAL) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. QUAL is a iShares Large Blend fund and IUSB is a iShares N/A fund. So, what’s the difference between QUAL and IUSB? And which fund is better?

The expense ratio of QUAL is 0.09 percentage points higher than IUSB’s (0.15% vs. 0.06%). QUAL also has a high exposure to the technology sector while IUSB is mostly comprised of AAA bonds. Overall, QUAL has provided higher returns than IUSB over the past 6 years.

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

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Summary

QUALIUSB
NameiShares MSCI USA Quality Factor ETFiShares Core Total USD Bond Market ETF
CategoryLarge BlendN/A
IssueriSharesiShares
AUM23.93B14.49B
Avg. Return13.42%4.13%
Div. Yield1.29%2.1%
Expense Ratio0.15%0.06%

The iShares MSCI USA Quality Factor ETF (QUAL) is a Large Blend fund that is issued by iShares. It currently has 23.93B total assets under management and has yielded an average annual return of 13.42% over the past 10 years. The fund has a dividend yield of 1.29% with an expense ratio of 0.15%.

The iShares Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.

QUAL’s dividend yield is 0.81% lower than that of IUSB (1.29% vs. 2.1%). Also, QUAL yielded on average 9.29% more per year over the past decade (13.42% vs. 4.13%). The expense ratio of QUAL is 0.09 percentage points higher than IUSB’s (0.15% vs. 0.06%).

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Fund Composition

Holdings

QUAL - Holdings

QUAL HoldingsWeight
Facebook Inc Class A4.77%
Nike Inc Class B4.05%
Microsoft Corp3.54%
Apple Inc3.52%
Johnson & Johnson2.99%
BlackRock Inc2.87%
Target Corp2.8%
Mastercard Inc Class A2.72%
NVIDIA Corp2.71%
Alphabet Inc Class A2.49%

QUAL’s Top Holdings are Facebook Inc Class A, Nike Inc Class B, Microsoft Corp, Apple Inc, and Johnson & Johnson at 4.77%, 4.05%, 3.54%, 3.52%, and 2.99%.

BlackRock Inc (2.87%), Target Corp (2.8%), and Mastercard Inc Class A (2.72%) have a slightly smaller but still significant weight. NVIDIA Corp and Alphabet Inc Class A are also represented in the QUAL’s holdings at 2.71% and 2.49%.

IUSB - Holdings

IUSB Bond SectorsWeight
AAA58.32%
BBB16.98%
A12.27%
BB4.33%
AA3.36%
B2.8%
Others1.01%
Below B0.92%
US Government0.0%

IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.

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Risk Analysis

QUALIUSB
Mean Return00
R-squared00
Std. Deviation00
Alpha00
Beta00
Sharpe Ratio00
Treynor Ratio00

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

The iShares Core Total USD Bond Market ETF (IUSB) has a Alpha of 0 with a Treynor Ratio of 0 and a Sharpe Ratio of 0. Its R-squared is 0 while IUSB’s Beta is 0. Furthermore, the fund has a Standard Deviation of 0 and a Mean Return of 0.

QUAL’s Mean Return is 0.00 points lower than that of IUSB and its R-squared is 0.00 points lower. With a Standard Deviation of 0, QUAL is slightly less volatile than IUSB. The Alpha and Beta of QUAL are 0.00 points lower and 0.00 points lower than IUSB’s Alpha and Beta.

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Performance

Annual Returns

QUAL vs. IUSB - Annual Returns

YearQUALIUSB
202016.96%7.59%
201934.14%9.26%
2018-5.77%-0.38%
201722.26%4.06%
20169.18%3.78%
20155.56%0.46%
201411.62%0.0%
20130.0%0.0%
20120.0%0.0%
20110.0%0.0%
20100.0%0.0%

QUAL had its best year in 2019 with an annual return of 34.14%. QUAL’s worst year over the past decade yielded -5.77% and occurred in 2018. In most years the iShares MSCI USA Quality Factor ETF provided moderate returns such as in 2010, 2015, and 2016 where annual returns amounted to 0.0%, 5.56%, and 9.18% respectively.

The year 2019 was the strongest year for IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.

Portfolio Growth

QUAL vs. IUSB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
QUAL$10,000$20,83113.42%
IUSB$10,000$12,7044.13%

A $10,000 investment in QUAL would have resulted in a final balance of $20,831. This is a profit of $10,831 over 6 years and amounts to a compound annual growth rate (CAGR) of 13.42%.

With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.

QUAL’s CAGR is 9.29 percentage points higher than that of IUSB and as a result, would have yielded $8,127 more on a $10,000 investment. Thus, QUAL outperformed IUSB by 9.29% annually.


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