The iShares MSCI USA Quality Factor ETF (QUAL) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. QUAL is a iShares Large Blend fund and MTUM is a iShares Large Growth fund. So, what’s the difference between QUAL and MTUM? And which fund is better?
QUAL and MTUM have the same expense ratio: 0.15%. QUAL also has a higher exposure to the technology sector and a lower standard deviation. Overall, QUAL has provided lower returns than MTUM over the past 7 years.
In this article, we’ll compare QUAL vs. MTUM. We’ll look at annual returns and performance, as well as at their fund composition and risk metrics. Moreover, I’ll also discuss QUAL’s and MTUM’s portfolio growth, holdings, and industry exposure and examine how these affect their overall returns.
|Name||iShares MSCI USA Quality Factor ETF||iShares MSCI USA Momentum Factor ETF|
|Category||Large Blend||Large Growth|
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 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%.
QUAL’s dividend yield is 0.85% higher than that of MTUM (1.29% vs. 0.44%). Also, QUAL yielded on average 3.95% less per year over the past decade (13.42% vs. 17.37%). QUAL and MTUM have the same expense ratio: 0.15%.
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The iShares MSCI USA Quality Factor ETF (QUAL) has the most exposure to the Technology sector at 22.52%. This is followed by Financial Services and Healthcare at 15.87% and 13.22% respectively. Basic Materials (2.35%), Utilities (2.41%), and Real Estate (2.72%) only make up 7.48% of the fund’s total assets.
QUAL’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Consumer Cyclical, Communication Services, and Healthcare stocks at 8.57%, 9.22%, 9.43%, 11.44%, and 13.22%.
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%.
QUAL is 7.28% more exposed to the Technology sector than MTUM (22.52% vs 15.24%). QUAL’s exposure to Financial Services and Healthcare stocks is 18.45% lower and 6.81% higher respectively (15.87% vs. 34.32% and 13.22% vs. 6.41%). In total, Basic Materials, Utilities, and Real Estate also make up 3.71% more of the fund’s holdings compared to MTUM (7.48% vs. 3.77%).
|Facebook Inc Class A||4.77%|
|Nike Inc Class B||4.05%|
|Johnson & Johnson||2.99%|
|Mastercard Inc Class A||2.72%|
|Alphabet Inc Class A||2.49%|
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%.
|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%|
|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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The iShares MSCI USA Quality Factor ETF (QUAL) has a Alpha of 0 with a Treynor Ratio of 0 and a Standard Deviation of 0. Its Mean Return is 0 while QUAL’s R-squared is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Beta of 0.
The iShares MSCI USA Momentum Factor ETF (MTUM) has a Treynor Ratio of 0 with a Alpha of 0 and a Mean Return of 0. Its Beta is 0 while MTUM’s Standard Deviation is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a R-squared of 0.
QUAL’s Mean Return is 0.00 points lower than that of MTUM and its R-squared is 0.00 points lower. With a Standard Deviation of 0, QUAL is slightly less volatile than MTUM. The Alpha and Beta of QUAL are 0.00 points lower and 0.00 points lower than MTUM’s Alpha and Beta.
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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 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in QUAL would have resulted in a final balance of $23,251. This is a profit of $13,251 over 7 years and amounts to a compound annual growth rate (CAGR) of 13.42%.
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%.
QUAL’s CAGR is 3.95 percentage points lower than that of MTUM and as a result, would have yielded $6,050 less on a $10,000 investment. Thus, QUAL performed worse than MTUM by 3.95% annually.
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