USMV vs. EMB: What’s The Difference?

The iShares MSCI USA Min Vol Factor ETF (USMV) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. USMV is a iShares Large Blend fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between USMV and EMB? And which fund is better?

The expense ratio of USMV is 0.24 percentage points lower than EMB’s (0.15% vs. 0.39%). USMV also has a high exposure to the technology sector while EMB is mostly comprised of BBB bonds. Overall, USMV has provided higher returns than EMB over the past 8 years.

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

Summary

USMV EMB
Name iShares MSCI USA Min Vol Factor ETF iShares J.P. Morgan USD Emerging Markets Bond ETF
Category Large Blend Emerging Markets Bond
Issuer iShares iShares
AUM 27.6B 19.76B
Avg. Return 13.89% 6.43%
Div. Yield 1.5% 3.85%
Expense Ratio 0.15% 0.39%

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 J.P. Morgan USD Emerging Markets Bond ETF (EMB) is a Emerging Markets Bond fund that is issued by iShares. It currently has 19.76B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 3.85% with an expense ratio of 0.39%.

USMV’s dividend yield is 2.35% lower than that of EMB (1.5% vs. 3.85%). Also, USMV yielded on average 7.46% more per year over the past decade (13.89% vs. 6.43%). The expense ratio of USMV is 0.24 percentage points lower than EMB’s (0.15% vs. 0.39%).

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%.

EMB - Holdings

EMB Bond Sectors Weight
BBB 33.79%
B 21.97%
BB 16.92%
A 13.67%
AA 7.97%
Below B 4.49%
Others 1.11%
AAA 0.09%
US Government 0.0%

EMB’s Top Bond Sectors are ratings of BBB, B, BB, A, and AA at 33.79%, 21.97%, 16.92%, 13.67%, and 7.97%. The fund is less weighted towards Below B (4.49%), Others (1.11%), and AAA (0.09%) rated bonds.

Risk Analysis

USMV EMB
Mean Return 0 0.44
R-squared 0 23.34
Std. Deviation 0 8.44
Alpha 0 0.89
Beta 0 1.36
Sharpe Ratio 0 0.55
Treynor Ratio 0 3.24

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

The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a Alpha of 0.89 with a Beta of 1.36 and a Treynor Ratio of 3.24. Its Mean Return is 0.44 while EMB’s Sharpe Ratio is 0.55. Furthermore, the fund has a R-squared of 23.34 and a Standard Deviation of 8.44.

USMV’s Mean Return is 0.44 points lower than that of EMB and its R-squared is 23.34 points lower. With a Standard Deviation of 0, USMV is slightly less volatile than EMB. The Alpha and Beta of USMV are 0.89 points lower and 1.36 points lower than EMB’s Alpha and Beta.

Performance

Annual Returns

USMV vs. EMB - Annual Returns

Year USMV EMB
2020 5.6% 5.48%
2019 27.77% 15.57%
2018 1.36% -5.67%
2017 18.97% 9.98%
2016 10.5% 9.41%
2015 5.5% 0.43%
2014 16.34% 6.69%
2013 25.11% -7.42%
2012 11.04% 17.64%
2011 0.0% 7.2%
2010 0.0% 11.47%

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 2012 was the strongest year for EMB, returning 17.64% on an annual basis. The poorest year for EMB in the last ten years was 2013, with a yield of -7.42%. Most years the iShares J.P. Morgan USD Emerging Markets Bond ETF has given investors modest returns, such as in 2014, 2011, and 2016, when gains were 6.69%, 7.2%, and 9.41% respectively.

Portfolio Growth

USMV vs. EMB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
USMV $10,000 $27,607 13.89%
EMB $10,000 $13,725 6.43%

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 EMB, the end total would have been $13,725. This equates to a $3,725 profit over 8 years and a compound annual growth rate (CAGR) of 6.43%.

USMV’s CAGR is 7.46 percentage points higher than that of EMB and as a result, would have yielded $13,882 more on a $10,000 investment. Thus, USMV outperformed EMB by 7.46% annually.


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