Skip to content

SHY vs. MTUM: What’s The Difference?

The iShares 1-3 Year Treasury Bond ETF (SHY) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. SHY is a iShares Short Government fund and MTUM is a iShares Large Growth fund. So, what’s the difference between SHY and MTUM? And which fund is better?

SHY and MTUM have the same expense ratio: 0.15%. SHY is mostly comprised of AAA bonds while MTUM has a high exposure to the financial services sector. Overall, SHY has provided lower returns than MTUM over the past 7 years.

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

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

SHYMTUM
NameiShares 1-3 Year Treasury Bond ETFiShares MSCI USA Momentum Factor ETF
CategoryShort GovernmentLarge Growth
IssueriSharesiShares
AUM19.51B14.53B
Avg. Return1.27%17.37%
Div. Yield0.46%0.44%
Expense Ratio0.15%0.15%

The iShares 1-3 Year Treasury Bond ETF (SHY) is a Short Government fund that is issued by iShares. It currently has 19.51B total assets under management and has yielded an average annual return of 1.27% over the past 10 years. The fund has a dividend yield of 0.46% 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%.

SHY’s dividend yield is 0.02% higher than that of MTUM (0.46% vs. 0.44%). Also, SHY yielded on average 16.09% less per year over the past decade (1.27% vs. 17.37%). SHY and MTUM have the same expense ratio: 0.15%.

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Holdings

SHY - Holdings

SHY Bond SectorsWeight
AAA99.67%
Others0.33%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

SHY’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.67%, 0.33%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.

MTUM - Holdings

MTUM HoldingsWeight
Tesla Inc5.63%
The Walt Disney Co4.39%
JPMorgan Chase & Co4.35%
Berkshire Hathaway Inc Class B4.34%
Bank of America Corp3.81%
PayPal Holdings Inc3.76%
Wells Fargo & Co3.05%
Applied Materials Inc3.05%
Moderna Inc2.89%
Alphabet Inc Class C2.84%

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%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

SHYMTUM
Mean Return0.090
R-squared39.110
Std. Deviation0.890
Alpha-0.030
Beta0.180
Sharpe Ratio0.540
Treynor Ratio2.60

The iShares 1-3 Year Treasury Bond ETF (SHY) has a Sharpe Ratio of 0.54 with a Standard Deviation of 0.89 and a Treynor Ratio of 2.6. Its Beta is 0.18 while SHY’s Alpha is -0.03. Furthermore, the fund has a R-squared of 39.11 and a Mean Return of 0.09.

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

SHY’s Mean Return is 0.09 points higher than that of MTUM and its R-squared is 39.11 points higher. With a Standard Deviation of 0.89, SHY is slightly more volatile than MTUM. The Alpha and Beta of SHY are 0.03 points lower and 0.18 points higher than MTUM’s Alpha and Beta.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

SHY vs. MTUM - Annual Returns

YearSHYMTUM
20203.01%29.69%
20193.42%27.57%
20181.45%-1.77%
20170.27%37.6%
20160.75%4.89%
20150.43%9.12%
20140.48%14.48%
20130.23%0.0%
20120.31%0.0%
20111.43%0.0%
20102.23%0.0%

SHY had its best year in 2019 with an annual return of 3.42%. SHY’s worst year over the past decade yielded 0.23% and occurred in 2013. In most years the iShares 1-3 Year Treasury Bond ETF provided moderate returns such as in 2014, 2016, and 2011 where annual returns amounted to 0.48%, 0.75%, and 1.43% 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

SHY vs. MTUM - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
SHY$10,000$11,0171.27%
MTUM$10,000$29,30117.37%

A $10,000 investment in SHY would have resulted in a final balance of $11,017. This is a profit of $1,017 over 7 years and amounts to a compound annual growth rate (CAGR) of 1.27%.

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%.

SHY’s CAGR is 16.09 percentage points lower than that of MTUM and as a result, would have yielded $18,284 less on a $10,000 investment. Thus, SHY performed worse than MTUM by 16.09% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply

Your email address will not be published. Required fields are marked *