USMV vs. ACWI: What’s The Difference?

The iShares MSCI USA Min Vol Factor ETF (USMV) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. USMV is a iShares Large Blend fund and ACWI is a iShares N/A fund. So, what’s the difference between USMV and ACWI? And which fund is better?

The expense ratio of USMV is 0.17 percentage points lower than ACWI’s (0.15% vs. 0.32%). USMV also has a higher exposure to the technology sector and a lower standard deviation. Overall, USMV has provided higher returns than ACWI over the past 8 years.

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

Summary

USMV ACWI
Name iShares MSCI USA Min Vol Factor ETF iShares MSCI ACWI ETF
Category Large Blend N/A
Issuer iShares iShares
AUM 27.6B 16.85B
Avg. Return 13.89% 10.21%
Div. Yield 1.5% 1.39%
Expense Ratio 0.15% 0.32%

The iShares MSCI USA Min Vol Factor ETF (USMV) is a Large Blend fund that is issued by iShares. It currently has 27.6B total assets under management and has yielded an average annual return of 13.89% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

USMV’s dividend yield is 0.11% higher than that of ACWI (1.5% vs. 1.39%). Also, USMV yielded on average 3.68% more per year over the past decade (13.89% vs. 10.21%). The expense ratio of USMV is 0.17 percentage points lower than ACWI’s (0.15% vs. 0.32%).

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Fund Composition

Industry Exposure

USMV vs. ACWI - Industry Exposure

USMV ACWI
Technology 20.53% 20.41%
Industrials 10.51% 9.65%
Energy 0.21% 3.48%
Communication Services 11.03% 9.87%
Utilities 6.93% 2.61%
Healthcare 18.42% 11.74%
Consumer Defensive 12.82% 7.15%
Real Estate 2.73% 2.75%
Financial Services 9.65% 15.58%
Consumer Cyclical 5.53% 12.01%
Basic Materials 1.65% 4.73%

The iShares MSCI USA Min Vol Factor ETF (USMV) has the most exposure to the Technology sector at 20.53%. This is followed by Healthcare and Consumer Defensive at 18.42% and 12.82% respectively. Basic Materials (1.65%), Real Estate (2.73%), and Consumer Cyclical (5.53%) only make up 9.91% of the fund’s total assets.

USMV’s mid-section with moderate exposure is comprised of Utilities, Financial Services, Industrials, Communication Services, and Consumer Defensive stocks at 6.93%, 9.65%, 10.51%, 11.03%, and 12.82%.

The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.

ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.

USMV is 0.12% more exposed to the Technology sector than ACWI (20.53% vs 20.41%). USMV’s exposure to Healthcare and Consumer Defensive stocks is 6.68% higher and 5.67% higher respectively (18.42% vs. 11.74% and 12.82% vs. 7.15%). In total, Basic Materials, Real Estate, and Consumer Cyclical also make up 9.58% less of the fund’s holdings compared to ACWI (9.91% vs. 19.49%).

Holdings

USMV - Holdings

USMV Holdings Weight
Eli Lilly and Co 1.64%
Microsoft Corp 1.62%
T-Mobile US Inc 1.51%
Accenture PLC Class A 1.51%
Visa Inc Class A 1.49%
Waste Management Inc 1.45%
Adobe Inc 1.45%
The Kroger Co 1.44%
Johnson & Johnson 1.42%
Gilead Sciences Inc 1.42%

USMV’s Top Holdings are Eli Lilly and Co, Microsoft Corp, T-Mobile US Inc, Accenture PLC Class A, and Visa Inc Class A at 1.64%, 1.62%, 1.51%, 1.51%, and 1.49%.

Waste Management Inc (1.45%), Adobe Inc (1.45%), and The Kroger Co (1.44%) have a slightly smaller but still significant weight. Johnson & Johnson and Gilead Sciences Inc are also represented in the USMV’s holdings at 1.42% and 1.42%.

ACWI - Holdings

ACWI Holdings Weight
Apple Inc 3.44%
Microsoft Corp 2.91%
Amazon.com Inc 2.21%
Facebook Inc A 1.25%
Alphabet Inc Class C 1.12%
Alphabet Inc A 1.09%
Taiwan Semiconductor Manufacturing Co Ltd 0.79%
Tesla Inc 0.78%
NVIDIA Corp 0.74%
JPMorgan Chase & Co 0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

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Risk Analysis

USMV ACWI
Mean Return 0 0.89
R-squared 0 99.96
Std. Deviation 0 14.05
Alpha 0 0.15
Beta 0 1
Sharpe Ratio 0 0.71
Treynor Ratio 0 9.45

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

The iShares MSCI ACWI ETF (ACWI) has a Mean Return of 0.89 with a R-squared of 99.96 and a Alpha of 0.15. Its Standard Deviation is 14.05 while ACWI’s Beta is 1. Furthermore, the fund has a Treynor Ratio of 9.45 and a Sharpe Ratio of 0.71.

USMV’s Mean Return is 0.89 points lower than that of ACWI and its R-squared is 99.96 points lower. With a Standard Deviation of 0, USMV is slightly less volatile than ACWI. The Alpha and Beta of USMV are 0.15 points lower and 1.00 points lower than ACWI’s Alpha and Beta.

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Performance

Annual Returns

USMV vs. ACWI - Annual Returns

Year USMV ACWI
2020 5.6% 16.38%
2019 27.77% 26.7%
2018 1.36% -9.15%
2017 18.97% 24.35%
2016 10.5% 8.22%
2015 5.5% -2.39%
2014 16.34% 4.64%
2013 25.11% 22.91%
2012 11.04% 15.99%
2011 0.0% -7.6%
2010 0.0% 12.31%

USMV had its best year in 2019 with an annual return of 27.77%. USMV’s worst year over the past decade yielded 0.0% and occurred in 2011. In most years the iShares MSCI USA Min Vol Factor ETF provided moderate returns such as in 2020, 2016, and 2012 where annual returns amounted to 5.6%, 10.5%, and 11.04% respectively.

The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.

Portfolio Growth

USMV vs. ACWI - Portfolio Growth

Fund Initial Balance Final Balance CAGR
USMV $10,000 $27,607 13.89%
ACWI $10,000 $22,631 10.21%

A $10,000 investment in USMV would have resulted in a final balance of $27,607. This is a profit of $17,607 over 8 years and amounts to a compound annual growth rate (CAGR) of 13.89%.

With a $10,000 investment in ACWI, the end total would have been $22,631. This equates to a $12,631 profit over 8 years and a compound annual growth rate (CAGR) of 10.21%.

USMV’s CAGR is 3.68 percentage points higher than that of ACWI and as a result, would have yielded $4,976 more on a $10,000 investment. Thus, USMV outperformed ACWI by 3.68% annually.


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