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SPY vs. MBB: What’s The Difference?

The SPDR S&P 500 ETF Trust (SPY) and the iShares MBS ETF (MBB) are both among the Top 100 ETFs. SPY is a SPDR State Street Global Advisors Large Blend fund and MBB is a iShares Intermediate Government fund. So, what’s the difference between SPY and MBB? And which fund is better?

The expense ratio of SPY is 0.03 percentage points higher than MBB’s (0.09% vs. 0.06%). SPY also has a high exposure to the technology sector while MBB is mostly comprised of AAA bonds. Overall, SPY has provided higher returns than MBB over the past ten years.

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

Summary

 SPYMBB
NameSPDR S&P 500 ETF TrustiShares MBS ETF
CategoryLarge BlendIntermediate Government
IssuerSPDR State Street Global AdvisorsiShares
AUM374.03B25.69B
Avg. Return14.41%3.08%
Div. Yield1.3%1.88%
Expense Ratio0.09%0.06%

If you are also looking for SPY vs. IWR, You can check out all those details.

The SPDR S&P 500 ETF Trust (SPY) is a Large Blend fund that is issued by SPDR State Street Global Advisors. It currently has 374.03B total assets under management and has yielded an average annual return of 14.41% over the past 10 years. The fund has a dividend yield of 1.3% with an expense ratio of 0.09%.

The iShares MBS ETF (MBB) is a Intermediate Government fund that is issued by iShares. It currently has 25.69B total assets under management and has yielded an average annual return of 3.08% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.06%.

SPY’s dividend yield is 0.58% lower than that of MBB (1.3% vs. 1.88%). Also, SPY yielded on average 11.33% more per year over the past decade (14.41% vs. 3.08%). The expense ratio of SPY is 0.03 percentage points higher than MBB’s (0.09% vs. 0.06%).

Fund Composition

Holdings

SPY - Holdings

I have a comparison for SPY vs. EFA, You can check out all those details.

SPY HoldingsWeight
Apple Inc5.9%
Microsoft Corp5.6%
Amazon.com Inc4.05%
Facebook Inc A2.29%
Alphabet Inc A2.02%
Alphabet Inc Class C1.96%
Berkshire Hathaway Inc Class B1.45%
Tesla Inc1.44%
NVIDIA Corp1.37%
JPMorgan Chase & Co1.29%

SPY’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 5.9%, 5.6%, 4.05%, 2.29%, and 2.02%.

Alphabet Inc Class C (1.96%), Berkshire Hathaway Inc Class B (1.45%), and Tesla Inc (1.44%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SPY’s holdings at 1.37% and 1.29%.

MBB - Holdings
MBB Bond SectorsWeight
AAA99.51%
Others0.49%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

MBB’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.51%, 0.49%, 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.

Risk Analysis

 SPYMBB
Mean Return1.230.2
R-squared10074.38
Std. Deviation13.562.12
Alpha-0.090.14
Beta10.6
Sharpe Ratio1.040.87
Treynor Ratio14.123.02

The SPDR S&P 500 ETF Trust (SPY) has a Beta of 1 with a Treynor Ratio of 14.12 and a Mean Return of 1.23. Its R-squared is 100 while SPY’s Alpha is -0.09. Furthermore, the fund has a Standard Deviation of 13.56 and a Sharpe Ratio of 1.04.

A pretty close comparison I have also cover is SPY vs. VXUS.

The iShares MBS ETF (MBB) has a Standard Deviation of 2.12 with a Beta of 0.6 and a Mean Return of 0.2. Its Treynor Ratio is 3.02 while MBB’s R-squared is 74.38. Furthermore, the fund has a Sharpe Ratio of 0.87 and a Alpha of 0.14.

SPY’s Mean Return is 1.03 points higher than that of MBB and its R-squared is 25.62 points higher. With a Standard Deviation of 13.56, SPY is slightly more volatile than MBB. The Alpha and Beta of SPY are 0.23 points lower and 0.40 points higher than MBB’s Alpha and Beta.

Performance

Annual Returns

SPY vs. MBB - Annual Returns
YearSPYMBB
202018.25%4.03%
201931.29%6.27%
2018-4.45%0.81%
201721.69%2.37%
201611.8%1.28%
20151.34%1.28%
201413.53%6.16%
201332.21%-1.92%
201215.84%2.23%
20112.06%5.88%
201014.93%5.44%

SPY had its best year in 2013 with an annual return of 32.21%. SPY’s worst year over the past decade yielded -4.45% and occurred in 2018. In most years the SPDR S&P 500 ETF Trust provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.53%, 14.93%, and 15.84% respectively.

If you need another SPY comparison I have one SPY vs. DIA right here.

The year 2019 was the strongest year for MBB, returning 6.27% on an annual basis. The poorest year for MBB in the last ten years was 2013, with a yield of -1.92%. Most years the iShares MBS ETF has given investors modest returns, such as in 2012, 2017, and 2020, when gains were 2.23%, 2.37%, and 4.03% respectively.

Portfolio Growth

SPY vs. MBB - Portfolio Growth
FundInitial BalanceFinal BalanceCAGR
SPY$10,000$41,71214.41%
MBB$10,000$13,9063.08%

A $10,000 investment in SPY would have resulted in a final balance of $41,712. This is a profit of $31,712 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.41%.

The SPY vs. IUSB is another great set of index’s and ETF to look at.

With a $10,000 investment in MBB, the end total would have been $13,906. This equates to a $3,906 profit over 11 years and a compound annual growth rate (CAGR) of 3.08%.

SPY’s CAGR is 11.33 percentage points higher than that of MBB and as a result, would have yielded $27,806 more on a $10,000 investment. Thus, SPY outperformed MBB by 11.33% annually.


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