USMV vs. BIV: What’s The Difference?

The iShares MSCI USA Min Vol Factor ETF (USMV) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. USMV is a iShares Large Blend fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between USMV and BIV? And which fund is better?

The expense ratio of USMV is 0.10 percentage points higher than BIV’s (0.15% vs. 0.05%). USMV also has a high exposure to the technology sector while BIV is mostly comprised of AAA bonds. Overall, USMV has provided higher returns than BIV over the past 8 years.

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

Summary

USMV BIV
Name iShares MSCI USA Min Vol Factor ETF Vanguard Intermediate-Term Bond Index Fund ETF Shares
Category Large Blend Intermediate-Term Bond
Issuer iShares Vanguard
AUM 27.6B 39.05B
Avg. Return 13.89% 5.31%
Div. Yield 1.5% 2.06%
Expense Ratio 0.15% 0.05%

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 Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.

USMV’s dividend yield is 0.56% lower than that of BIV (1.5% vs. 2.06%). Also, USMV yielded on average 8.58% more per year over the past decade (13.89% vs. 5.31%). The expense ratio of USMV is 0.10 percentage points higher than BIV’s (0.15% vs. 0.05%).

Fund Composition

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%.

BIV - Holdings

BIV Bond Sectors Weight
AAA 54.51%
BBB 25.24%
A 16.97%
AA 3.1%
Others 0.15%
Below B 0.03%
B 0.0%
BB 0.0%
US Government 0.0%

BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.

Risk Analysis

USMV BIV
Mean Return 0 0.35
R-squared 0 95.12
Std. Deviation 0 4.09
Alpha 0 -0.07
Beta 0 1.33
Sharpe Ratio 0 0.89
Treynor Ratio 0 2.72

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

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Standard Deviation of 4.09 with a Sharpe Ratio of 0.89 and a Treynor Ratio of 2.72. Its Mean Return is 0.35 while BIV’s Alpha is -0.07. Furthermore, the fund has a R-squared of 95.12 and a Beta of 1.33.

USMV’s Mean Return is 0.35 points lower than that of BIV and its R-squared is 95.12 points lower. With a Standard Deviation of 0, USMV is slightly less volatile than BIV. The Alpha and Beta of USMV are 0.07 points higher and 1.33 points lower than BIV’s Alpha and Beta.

Performance

Annual Returns

USMV vs. BIV - Annual Returns

Year USMV BIV
2020 5.6% 9.71%
2019 27.77% 10.19%
2018 1.36% -0.09%
2017 18.97% 3.8%
2016 10.5% 2.86%
2015 5.5% 1.23%
2014 16.34% 7.0%
2013 25.11% -3.44%
2012 11.04% 7.02%
2011 0.0% 10.62%
2010 0.0% 9.55%

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 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.

Portfolio Growth

USMV vs. BIV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
USMV $10,000 $27,607 13.89%
BIV $10,000 $13,487 5.31%

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 BIV, the end total would have been $13,487. This equates to a $3,487 profit over 8 years and a compound annual growth rate (CAGR) of 5.31%.

USMV’s CAGR is 8.58 percentage points higher than that of BIV and as a result, would have yielded $14,120 more on a $10,000 investment. Thus, USMV outperformed BIV by 8.58% 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) 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!

2) 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!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

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

Leave a Reply