The iShares MSCI USA Min Vol Factor ETF (USMV) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. USMV is a iShares Large Blend fund and IUSB is a iShares N/A fund. So, what’s the difference between USMV and IUSB? And which fund is better?
The expense ratio of USMV is 0.09 percentage points higher than IUSB’s (0.15% vs. 0.06%). USMV also has a high exposure to the technology sector while IUSB is mostly comprised of AAA bonds. Overall, USMV has provided higher returns than IUSB over the past 6 years.
In this article, we’ll compare USMV vs. IUSB. We’ll look at annual returns and industry exposure, as well as at their performance and holdings. Moreover, I’ll also discuss USMV’s and IUSB’s portfolio growth, risk metrics, and fund composition and examine how these affect their overall returns.
|Name||iShares MSCI USA Min Vol Factor ETF||iShares Core Total USD Bond Market ETF|
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 Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.
USMV’s dividend yield is 0.60% lower than that of IUSB (1.5% vs. 2.1%). Also, USMV yielded on average 9.77% more per year over the past decade (13.89% vs. 4.13%). The expense ratio of USMV is 0.09 percentage points higher than IUSB’s (0.15% vs. 0.06%).
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|Eli Lilly and Co||1.64%|
|T-Mobile US Inc||1.51%|
|Accenture PLC Class A||1.51%|
|Visa Inc Class A||1.49%|
|Waste Management 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%.
|IUSB Bond Sectors||Weight|
IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.
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The iShares MSCI USA Min Vol Factor ETF (USMV) has a Standard Deviation of 0 with a Alpha of 0 and a Sharpe Ratio of 0. Its Mean Return is 0 while USMV’s R-squared is 0. Furthermore, the fund has a Beta of 0 and a Treynor Ratio of 0.
The iShares Core Total USD Bond Market ETF (IUSB) has a Alpha of 0 with a Standard Deviation of 0 and a Beta of 0. Its Sharpe Ratio is 0 while IUSB’s R-squared is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Mean Return of 0.
USMV’s Mean Return is 0.00 points lower than that of IUSB and its R-squared is 0.00 points lower. With a Standard Deviation of 0, USMV is slightly less volatile than IUSB. The Alpha and Beta of USMV are 0.00 points lower and 0.00 points lower than IUSB’s Alpha and Beta.
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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 IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in USMV would have resulted in a final balance of $18,967. This is a profit of $8,967 over 6 years and amounts to a compound annual growth rate (CAGR) of 13.89%.
With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.
USMV’s CAGR is 9.77 percentage points higher than that of IUSB and as a result, would have yielded $6,263 more on a $10,000 investment. Thus, USMV outperformed IUSB by 9.77% annually.
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